ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 52 DB Rec# - 645 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH7.00 Title :CHAPTER 7.00 - PARTY AND GOVERNMENT Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : CHINA'S INDUSTRIAL SECTOR has shown great progress since 1949, but in the late 1980s it remained undeveloped in many respects. Although the country manufactured nuclear weapons and delivery systems and could launch domestically-produced satellites, many of its industries used technologies of the 1950s. Although China was one of the world's largest producers of fuel in the mid-1980s and had the world's largest hydropower potential, frequent energy shortages caused lengthy factory shutdowns. Despite massive coal reserves in north China, transportation deficiencies necessitated coal imports to south China. Research institutes developed sophisticated industrial technologies, but bureaucratic and political obstacles impeded implementation. To solve these and other problems, the Chinese leadership initiated sweeping economic reforms in the late 1970s. Although specific industrial reforms were not clearly defined, broad goals included loosening bureaucratic controls on enterprises and managers to promote a decentralization of authority. Other broad goals were to increase worker productivity by offering incentives; to give market forces greater influence on output mix, purchases, sales, and hiring; to make enterprises operate more efficiently and be responsible for profits and losses; and to restructure the price system to reflect supply and demand more accurately. Another major goal of the reform program was development of light industry. Beginning with the First Five-Year Plan (1953-57), China adopted the Soviet model of economic development, stressing a heavy industrial base. However, this emphasis seriously strained China's resources and capital and led the leadership in the late 1970s to shift to development of light industry. Because light industry is labor intensive, this shift helped to alleviate unemployment. It also satisfied growing consumer demand, which had not been met because of overemphasis on heavy industry. Another reason for diversification into light industry was the desire to increase exports to obtain much-needed foreign currency. By the mid-1980s, industrial reforms had achieved substantial success in some areas. Industrial output was about twenty-five times that of 1952. A wide range of modern industries had been established, and the country was one of the world's leading producers of coal, textiles, and bicycles. There were major plants in almost every key industry, and a strong effort had been made to introduce manufacturing into undeveloped and rural areas (see fig. ___, Major Industrial Areas and Facilities, 1983). Light-industry output of consumer goods had increased dramatically. In some cases, enterprises reduced operating costs, managers were able to exercise greater autonomy, and technical innovations were implemented to increase efficiency. Despite these bright spots in the 1980s, overall results were disappointing to Chinese economic planners. Major problems included failure to reform the price system, interference of local cadres in the managers' operation of enterprises, and perpetuation of the life tenure, "iron rice bowl" system (see Glossary) for workers. Rapid industrial growth made energy shortages one of the most critical problems facing the economy, limiting industrial enterprises and mines to 70 or 80 percent of capacity. According to China's energy planners, the country would have to quadruple electricity production to meet the gross value of industrial and agricultural output (GVIAO) target for the year 2000. For a quick increase in output, the industry emphasized short-term development of thermal power plants. In the long term China planned to rely on its vast hydropower potential and nuclear power to meet electricity demand. In the 1980s large-scale, centrally controlled plants dominated manufacturing. These large plants were supplemented with many small-scale town and township enterprises, which accounted for significant percentages of national output of coal, construction materials, and leather products. -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90051 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 53 DB Rec# - 646 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH7.01 Title :CHAPTER 7.01: TRENDS IN INDUSTRIAL PRODUCTION Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : TRENDS IN INDUSTRIAL PRODUCTION The shifts in economic policy typical of the People's Republic since 1949 have strongly affected industrial production (see _____________, ch. 5). In the recovery period from 1949 to 1952, industrial output more than doubled as plants were repaired and employment rose. The First Five-Year Plan (1953-57) concentrated on constructing plants and equipment for heavy industry, much of it with Soviet assistance. The machinery, iron and steel, and mining industries all built their foundations in this period. The increases in productive capacity resulted in a second doubling of output. The Great Leap Forward (1958-60, see Glossary) saw production surge by 45 percent in 1958 as new plants went into operation, facilities operated beyond capacity, and great numbers of small local plants were established. But the overambitious plan to revamp China's economy soon encountered problems of misallocation and overextension of resources. The demands of the Great Leap left the work force physically exhausted. As the overburdened economy began to collapse, growth fell to 22 percent in 1959 and 4 percent in 1960. Output dropped precipitously in 1961 because of the earlier withdrawal of Soviet technicians, misallocation of resources, and a serious food shortage (see The 1950s Period, ch. 6). In 1962, with the restoration of planning and coordination, production began to recover. Industrial priorities were transferred from production of industrial goods to agricultural inputs and consumer goods. By 1965 most sectors of industry had regained their 1957 production levels. In the early stages of the Cultural Revolution (1966-76, see Glossary), production declined when civil disturbances disrupted factories and transport in the big industrial cities. In 1967 output fell, and it remained below the 1966 level in 1968. After order was restored, production recovered in 1969 and grew by 18 percent in 1970. With resumption of growth and the beginning of the Fourth Five-Year Plan (1971-75), output grew by over 10 percent in 1971 and 1972, and by 13 percent in 1973. A wide-ranging program of investment in plants and equipment, including foreign imports, raised industrial capacity. Throughout the 1970s thousands of new, small-scale plants added significantly to levels of production, especially in coal, chemical fertilizer, cement, and electricity, although there were some setbacks. In the mid-1970s the influence of the Gang of Four (see Glossary) and disruption by the succession struggle again reduced industrial output. Political activities in factories and uncertainty by managers and planners caused growth to fall to 4.4 percent in 1974. Growth recovered to 10.3 percent in 1975 but fell to zero in 1976 in the uncertainty surrounding the deaths of Mao Zedong and Zhou Enlai, the second fall of Deng Xiaoping, and the destruction caused by the Tangshan earthquake (see End of the Era of Mao Zedong, ch. 1). In 1977 and 1978 the Four Modernizations effort (see Glossary) began in earnest. Growth reached 14 percent in 1977 when political stability was restored and plants resumed full operation. The high growth rate in 1977 and 1978 caused a serious overheating of the economy, however. At the end of 1978, the leadership introduced a comprehensive economic reform. In 1979 the economy entered a period of readjustment, emphasizing a slower, more rational rate of growth. Policy stressed development of light industry and gave priority to the textile and consumer industries in supplying raw and unfinished materials, power, fuel, and finances. Capital investment in light industry increased from 5.4 percent in 1978 to about 8 percent in 1980. Between 1978 and 1981 the proportion of light industry in gross industrial output value increased by about 9 percent. The rate of capital construction decreased, and the government initiated a major drive to correct imbalances in the economy by gearing production to consumer needs and improving efficiency. In 1983 the government took measures to economize on fuel, energy, raw materials, and working capital. The policy experimentally granted enterprises more autonomy. It introduced new types of contracts permitting limited competition among enterprises serving the same markets. The government began to allow market forces to determine production. At the Third Plenum of the Twelfth Central Committee of the Chinese Communist Party (CCP), in October 1984, the party officially reiterated its commitment to reform of the urban economy, signalling a high priority for industrial modernization. The Seventh Five-Year Plan (1986-90) called for greater responsiveness to consumer demand, increased efficiency, and a further assimilation of modern technology. The plan sought to accelerate development of the energy and raw-materials industries and control growth of manufacturing industries, making the two sectors develop more proportionately. Development of the transportation and communications sectors received high priority, and plans called for expanding the building industry. The leadership hoped to speed development of tertiary industry, such as restaurants and small shops, to meet consumer needs. -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90052 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 54 DB Rec# - 647 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH7.02 Title :CHAPTER 7.02: ORGANIZATION Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : ORGANIZATION The government managed industry according to type and level of control, using various State Council ministries and commissions (see The State Council, ch. 10). In 1987, there were separate ministries for aeronautics, astronautics, chemical, coal, electronics, metallurgy, nuclear-energy, ordnance, petroleum, and textiles industries, light industry, the railways, and water resources and electric power; there were two commissions--the National Defense Science, Technology, and Industry Commission and the State Machine-Building Industry Commission. In 1986 the government recognized four types of economic enterprise ownership: "ownership by the whole people" (or state ownership), collective, individual, and other. Under state ownership the productive assets of an enterprise were owned by the state, activities of the enterprise were determined by national economic plans, and profits or losses accrued to the state budget. Most of the largest modern enterprises were state-owned and directly controlled by the central government. Many other enterprises also were state-owned but were jointly supervised by the central government and authorities at the provincial, prefectural, or county levels. Profits from these enterprises were divided among the central and lower-level units (see Local Administration, ch. 10). Under collective ownership, productive assets were owned by the workers themselves (in the case of an urban enterprise) or by the members of enterprises established by rural units. Profits and losses belonged to the members of the collective, and government authorities directed the enterprise loosely. Collectively owned enterprises were generally small and labor intensive, employing approximately 27 million people in cities and towns in 1983. Individual ownership belonged to the category of individual handicrafts in the 1950s; by the mid-1980s it also included individual enterprises with a maximum of thirty employees. The Chinese authorities left the "other" category undefined. -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90053 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 55 DB Rec# - 648 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH7.03 Title :CHAPTER 7.03: GEOGRAPHIC DISTRIBUTION OF INDUSTRY Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : GEOGRAPHIC DISTRIBUTION OF INDUSTRY Before 1949 industry was concentrated in the large east-coast cities and in the northeast. Shanghai was the largest industrial center, followed by Anshan, Fushun, and Shenyang, all in Liaoning Province. Qingdao, in Shandong, and Tianjin also were important industrial centers. Only a few cities in the interior had any modern industry; they included Wuhan, Chongqing, and Taiyuan (see fig. __. Major Industrial Areas and Facilities, 1983). During the First Five-Year Plan (1953-57), the government specifically emphasized development of the northeast and areas other than Shanghai, China's most important industrial base. Industrial sites were constructed in the north around the new steel mills at Baotou, Nei Monggol Autonomous Region, and in central China in Wuhan, Hubei Province. Industrial centers also arose in the southwest, mostly in Sichuan Province. In the 1950s, industrial centers in east and northeast China accounted for approximately two-thirds of total industrial output. However, by 1983 industrial centers in the north, south, and southwest had increased their share of output to more than 40 percent (see fig. __, Percentage Distribution of Gross Industrial Output Value by Region, 1983). This increase was the result of a policy begun in the 1950s to gradually expand existing industrial bases to new areas, to build new bases in the north and south, and to establish a new base in the southwest. From 1952 to 1983, south, southwest, and northwest China registered higher industrial growth than the east, northeast, and north regions. Total industrial output grew the fastest in the south--from 13.7 percent of total output in 1952 to 18.5 percent in 1983 (see table __, Gross Value of Industrial Output, By Province, 1952, 1957, 1983. Appendix A). The government had stressed developing the interior regions since the 1950s, but by 1986 it had abandoned that strategy in order to develop areas with more established infrastructures. According to this plan, the south would continue growing, but the east and northeast would be the main benefactors. -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90054 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 56 DB Rec# - 649 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH7.04 Title :CHAPTER 7.04: LEVEL OF TECHNOLOGY Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : LEVEL OF TECHNOLOGY Despite marked improvement over the early years of the People's Republic, the technological level of Chinese industry generally remained quite low in the late 1980s. The Chinese made remarkable technological progress in some areas, such as nuclear weaponry, satellites, and computers; but overall the industrial sector lagged far behind that of the developed countries (see The Reform Program, ch. 9). Much of China's machinery and equipment dated from the 1950s and 1960s. The Soviet Union had provided technology assistance during the 1950s, but such aid ended abruptly in the early 1960s with the break in bilateral relations (see The Soviet Union, ch. 12). One of the main reasons for lagging technology was the lack of coordination between research institutes and production enterprises. Between 1979 and 1984, the number of major scientific and technical research discoveries grew from 2,790 to 10,000 and the number of inventions approved by the state from 42 to 264. Most of the discoveries and inventions were never implemented. This was mainly because research institutes and production enterprises operated independently, with little or no exchange of information. Also, most enterprise managers were more concerned with meeting production quotas than with technological innovations. There were no clear goals for research and development, and no concept of the importance of research and development to industry. Instead, efforts concentrated on research and development for purely scientific purposes. Therefore, China did not develop a broad base of industrial research and development. By 1981 only 8 percent of the total research and development work force was involved in industrial research compared to 72 percent in the United States. In 1983 only 3.2 persons per 10,000 population were involved in research, compared to 31 per 10,000 in the United States. Institutional obstacles and resource shortages also plagued research institutes. In 1985 the CCP issued the "Resolution on the Reform of the Science and Technology Management System." The resolution sought to coordinate research and production more closely. Part of the overall strategy of the Four Modernizations was to redirect science and technology toward economic progress. Research institutes were to compete for contracts from various industries and operate on a fee-for-service basis. Emphasis went to cooperation among factories, universities, and other institutes. As of 1987, the status of this effort remained unclear. The metallurgical industry had applied more internal technological innovation than the electronics industry because the technologies in the former were more developed than in the latter. The metallurgy industry made a stronger effort to blend research and production in individual enterprises. Also, major metallurgical complexes had internal research facilities for new-product research. On the other hand, electronics was much more compartmentalized; by the late 1980s there was no decisive breaking of the barriers between the technical and production elements. China's assimilation of imported technology had mixed results in the mid-1980s. There had been some remarkable accomplishments, but they had taken a long time. For example, advanced West German cold-rolling technology had moved into the Anshan iron and steel complex in Liaoning Province. The electronics sector was not as successful, because of shortages of raw materials, lack of a reliable power supply, low manpower skill, and a shortage of service and applications personnel. An exception was the Jiangnan Semiconductor Plant in Wuxi, Jiangsu Province, which received equipment from numerous Japanese and American companies. By 1987 it was highly productive. However, China's electronics industry, like most other industries, was far from implementing advanced technology, whatever its source. -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90055 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 57 DB Rec# - 650 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH7.05 Title :CHAPTER 7.05: SUPPLIES OF INDUSTRIAL RESOURCES Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : SUPPLIES OF INDUSTRIAL RESOURCES Capital Since 1949 China has devoted a large percentage of investment to industry. By 1983 investment in industry was approximately 57 percent of investment in fixed assets. In 1984 about -Y44 billion (for value of yuan---Y--see Glossary), or roughly 30 percent of total state expenditures, was slated for capital construction. In 1981 the leadership attempted to limit uncontrolled, excessive investment in capital construction. The results were not especially positive--partly because of reinvestment by enterprises allowed to retain profits, and partly because of foreign investment. To supplement domestic sources of capital, China's leadership began allowing virtually all forms of foreign loans and credit by the end of 1979. By early 1980, the country had access to the equivalent of almost US$30 billion in foreign loans and credits termed through 1985. The Chinese also sought foreign capital by encouraging joint-venture projects between Chinese and foreign enterprises (see Foreign Trade, ch. 8). But, in early 1986, foreign companies viewed China as a high-cost and high-risk investment area. In 1985 US$8.5 billion worth of foreign capital had been committed, compared to only $US500 million in the first quarter of 1986. Labor In the mid-1980s about 11 percent of the work force, or 50 million people, was employed by the industrial sector in state-owned units and collective enterprises (see Labor Force, ch. 2). In state-owned enterprises, the annual output per worker (the Chinese measure of productivity) rose by 9.4 percent to -Y15,349. In 1987 there was a severe urban unemployment problem, and a virtually unlimited supply of unskilled and semiskilled labor. Skilled workers, engineers, scientists, technicians, and managerial personnel were in very short supply. During the Cultural Revolution, many specialists were forced to abandon their occupations, and most training and educational programs ceased during the 10-year hiatus in higher education from 1966 to 1976 (see Education Policy, ch. 4). This led to a shortage of skilled personnel that seriously hampered the industrial sector's implementation of imported modern technology and independent development of new management and production forms. In 1980 a modern management training center was established in Dalian, Liaoning Province, with the help of foreign experts. In 1987 many Dalian graduates found it difficult to use their newly acquired skills because managerial autonomy was lacking, and many cadres had a vested interest in maintaining the status quo. It was unclear what effect students educated abroad were having on industry. Raw Materials China is well endowed with most of the important industrial ores, fuels, and other minerals. Only a few raw materials are not present in deposits large enough for domestic needs. Supplies of iron and coking coal, although of poor quality, are adequate. By the early to mid-1980s, China was a significant exporter of rare metals necessary for the aerospace and electronics industries. Nonetheless, China imported materials such as steel, pig iron, copper, and aluminum because of a large domestic demand and an inadequate transportation infrastructure--(see Iron Ore; Other Minerals, this ch.). -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90056 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 58 DB Rec# - 651 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH7.06 Title :CHAPTER 7.06: ENERGY Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : ENERGY Although China was the fourth-largest world producer of fuel in 1985, energy shortages remained a major obstacle to industrial growth. Energy waste was considerable; to offset this, some energy prices increased and penalties for waste went into force. Coal was the primary energy source, accounting in 1985 for more than 70 percent of total fuel consumption. Proven reserves were more than 700 billion tons, and estimated reserves were 3,000 billion tons. Onshore and offshore oil reserves in 1985 were around 5.3 billion tons, mostly untapped. China had the world's seventh-largest electric power generating capacity, but output still fell far short of demand. Total natural gas output for 1985 was 12.7 billion cubic meters, with 15 billion cubic meters the target by 1990. Natural gas and oil received equal weight in the Seventh Five-Year Plan (see Electric and Nuclear Power, this ch.). -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90057 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 59 DB Rec# - 652 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH7.07 Title :CHAPTER 7.07: MANUFACTURING Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : MANUFACTURING China's manufacturing sector developed according to the principle of "walking on two legs," a policy of self-reliance introduced in the 1950s. In the 1980s one leg consisted of the state-funded and state-controlled large and medium-sized plants with the most qualified personnel and the most advanced equipment. The other leg was small-scale plants using inferior equipment and large amounts of local labor. Together, the two sectors produced a wide range of industrial products. In most cases the larger plants accounted for the bulk of production, but the smaller enterprises were increasing their share and producing a significant percentage of cement, fertilizers, and farm machinery. Iron and Steel Before 1949 the iron and steel industry was small and dispersed; the Japanese had built the only modern steel facility just after World War I at Anshan, Liaoning Province. Although Japan eventually built nine blast furnaces in Anshan, total steel output by all plants never exceeded one million tons annually. Much of the Japanese equipment was either damaged in the civil war or removed by the Soviets at the end of World War II. Since the establishment of the People's Republic, considerable investment has gone consistently to expand steel output. However, steel production has been very sensitive to changes in economic policies and political climate (see fig. 9, Steel Production and Capacity, 1949-85). Steel output rose steadily in the 1950s when Soviet advisers helped establish the basis of the iron and steel industry, installing numerous Soviet-designed blast and open-hearth furnaces. The Great Leap Forward saw great growth of primitive backyard furnaces producing poor-quality pig iron, numerous new, small, modern plants, overuse of large plants, and exaggerated production reports. In 1961 the industry broke down; nearly all small plants were closed, and output fell to less than half the amount reported for 1960. From 1960 to 1965, output gradually recovered with equipment repair and the purchase of basic oxygen furnaces from Austria and electric furnaces from Japan. Production fell in 1967 and 1968 during the Cultural Revolution, but it grew rapidly in the relative political stability from 1969 through the early 1970s. In the mid-1970s political upheaval retarded output, as did the catastrophic Tangshan earthquake of 1976. That event severely damaged the Tangshan steel plant and the Kailuan coal mines. The latter are a major source of coking coal. After 1976 output climbed steadily, reaching 34.5 million tons in 1979. Steel production for 1986 was fifty million tons. Steel was viewed as the cornerstone or "key link" of both the Great Leap Forward and the Four Modernizations programs (see _______________, ch. 5). But the post-Mao leadership was determined not to repeat the economically disastrous Great Leap policies: in 1979 it called for a period of readjustment and a cutback in steel investment. However, it had set a goal of producing 80 million tons of steel by 2000. Production targets were to be met by renovating and improving existing facilities, rather than building new ones. Improvements in existing plants reduced steel-industry energy consumption from 73.8 million tons of coal in 1978 to 69.1 million tons in 1983, and production increased by 26 percent. However, the Chinese realized they would need outside assistance to fully modernize their steel industry. They sought hardware, technology transfer, and managerial and planning assistance. In 1987 China was the world's fifth-largest producer of iron and steel, but lagged far behind developed countries in production methods and quality. Most steel capacity was in open-earth furnaces with basic oxygen furnaces, electric furnaces, and side-blown converters. Much of the iron and coking coal used in making steel was of low quality. Approximately 25 percent of the country's coal went for steel production in 1985. In 1985 capital construction, considered excessive by the Chinese, exacerbated existing shortages of rolled steel, and imports filled 25 percent of domestic demand. The Ministry of Metallurgical Industry reported in 1985 that China had 13 plants capable of producing at least 1 million tons per year. Accounting for approximately 65 percent of total production, these mills were built mostly during the 1950s. The Anshan plant was the oldest and most productive of all, producing 7 million tons per year. The next largest was in Wuhan. It was constructed in the 1950s with Soviet aid. China began construction in 1978 on its first integrated steel complex, the Baoshan Iron and Steel Works in Shanghai, but the completion date moved from 1982 to 1985, and finally to 1988. Besides the larger plants, about 800 smaller mills were dispersed throughout the country in 1985. They ranged from specialty mills producing 500,000 tons per year to very small operations under local jurisdiction or other ministries. Many of the smaller mills were legacies of the Great Leap Forward, when local authorities had hurriedly established their own steel-making facilities. In the mid-1980s the government hoped to phase out these inefficient plants in favor of larger, more productive plants. In the late 1980s, it was apparent that steel output would remain insufficient to meet the needs of the Four Modernizations. During the period covered by the Seventh Five-Year Plan, imports were expected to average 41 percent of domestic output. Thin rolled sheets, used to make such items as vehicles, washing machines, and refrigerators, were in extremely short supply. In 1984 China had to import about half its steel sheet and about 80 percent of its steel plate. Production of tubes and pipes also was inadequate, and approximately 50 percent of all tubes had to be imported. The country was most proficient in the production of steel bars, but it still had to import an estimated 1.8 million tons of rods and bars in 1984. In 1985 China imported a record 15 million tons of steel, more than two-thirds of it from Japan. Machine Building The machinery industry has been a leading priority since the founding of the People's Republic. The industry expanded from a few small assembly and repair facilities before 1949 to a large, widely distributed machine-building sector producing many types of modern equipment. However, as of 1987 the overall level of technology was still relatively backward. In the late 1970s and early 1980s, China intended to use large-scale imports to modernize the machinery industry, but later decided that limiting imports to critical areas would be less costly. Ministry of Machine-Building Industry plans called for about 60 percent of the industry's products in 1990 to reach the technological level of the industrialized countries during the 1970s and 1980s. Products built to international standards received priority in allocation of funds, materials, and energy. In 1987 the machinery industry was distributed throughout the country. Nearly all counties and towns had one or more machine factories. Major machinery centers were Shanghai, Tianjin, Shenyang, Beijing, Harbin, Changchun, Taiyuan, Luoyang, Wuhan, Chongqing, Chengdu, Xi'an, and Lanzhou. The machinery industry was selected by the State Council to lead the way in management reform. China's leaders realized that the quality of machinery would determine the success of modernization in all areas of the economy. The industry's extreme compartmentalization (a legacy of the Maoist obsession with self-reliance) showed a lack of communication among departments or within regions. Skilled managers were also lacking. Machine Tools In 1986 about 120 major enterprises produced most of China's machine tools. Many of the large plants were in the east, north, and northeast, particularly in Beijing, Shanghai, Shenyang, Harbin, and Tianjin. In the early and mid-l980s, a number of agreements with foreign manufacturers aimed to help China upgrade its machine-tool industry. The Shanghai Municipal Government also asked World Bank's assistance in preparing and financing a comprehensive modernization scheme for the Shanghai machine-tool industry. Overall, the machine-tool industry was based on 1960s technology. Many of the tools had a service life of only five to seven years, compared with twelve to fifteen years in industrialized countries. The tools were generally unreliable and ill-suited for precision work because of outdated design, low-quality purchased components, substandard manufacturing facilities, and a lack of production-management expertise. Electric Power Equipment By the early 1970s, major generator production centers in Harbin, Liaoning Province, Shanghai, Beijing, and Deyang, Sichuan Province, had built both hydro and thermal generators as large as 300 megawatts. There also were numerous small and medium-sized plants producing generators in the 3.2 to 80-megawatt range. As of 1986, China manufactured condenser-type turbo-generating units with capacities of 6,000 to 300,000 kilowatts; back-pressure extraction generating units with capacities of 12,000 to 50,000 kilowatts, geothermal facilities with capacities of 1,000 to 3,000 kilowatts; and hydropower equipment consisting of generator equipment with an 18-million-kilowatt capacity. Deficiencies showed in power-generating equipment and transmission technology, and significant problems existed in direct-current transmission, particularly in converter technology. China continued to lack experience in design and production of high-volt-ampere transformers and circuit breakers. Transportation Equipment The automotive industry, which grew substantially after 1949, did not keep pace with the demands of modernization. In the early 1980s demand was still low. A surge in demand resulted in the production of 400,000 vehicles and the importation of another 300,000 vehicles through early 1985. In the second half of 1985, stringent administrative measures curtailed most imports, and in early 1986 domestic production was reduced to 13 percent of that in early 1985. One cause for this was a large surplus created by high production and importation levels in 1984 and 1985. Although 1986 production levels were considered a short-term slowdown, the targets of the Seventh Five-Year Plan (1986-90) were quite low. China's investment in the railroad industry during the Seventh Five-Year Plan was higher than that for any previous five-year plan, with an 80-percent increase over the Sixth Five-Year Plan (1981-85). The country allocated -Y10 billion to manufacture and purchase locomotives, with the remainder going to repair and renewal of obsolete equipment. During the Seventh Five-Year Plan, the Ministry of Railways set a production goal of 5,000 locomotives, including over 800 electric and over 2,000 diesel locomotives. The ministry also planned to manufacture 110,000 freight and 10,000 passenger cars. Despite these ambitious domestic production targets, China had to rely heavily on imported technology to modernize its railroad fleet. From 1961 to 1987, China's maritime fleet grew faster than that of any other country in the world. During that time, the merchant fleet tonnage increased by an average 13.6 percent per year. From 1982 to 1987, Chinese shipyards produced fifty-five ships, including bulk cargo vessels, freighters, tankers, container ships, partial container ships, and passenger-cargo vessels, with a total dead-weight tonnage of more than 700,000 million. At the end of 1985, about 17 percent of China's merchant fleet was built domestically. In the late 1950s, China began developing its own aircraft, known as the Yun, or Y-series. China built 135 civil aircraft between 1981 and 1985 and was scheduled to build hundreds more during the Seventh Five-Year Plan. Civil aircraft and aircraft engines were produced in large plants located primarily in Shanghai, Xi'an, Harbin, and Shenyang. Medium-sized factories produced the necessary test equipment, components, avionics, and accessories. China hoped for eventual self-reliance in all aircraft production, but it still imported planes in 1987. Metallurgical Equipment Much equipment in the metallurgical industry was based on Japanese designs of the 1930s and Soviet designs of the 1950s. Two-thirds of the major equipment at Anshan, one of the largest plants in China, was built during the 1930s and 1950s. In general, major metallurgical equipment was more technologically advanced than instruments and control systems. Measuring and monitoring instruments, essential to quality control, were in short supply. Most of the iron- and steel-making equipment in general use was domestically produced. This included blast furnaces based on Chinese improvements to old Soviet designs, ore-beneficiation plants, open-hearth furnaces, sideblown converters, electric furnaces, and a wide range of steel-finishing equipment. To achieve a higher technological level, various pieces of equipment were imported since China had not assimilated the technology necessary for domestic production. In most instances the industry imported only the main equipment, neglecting necessary control instruments and auxiliary technologies. Electronics In 1987 China's electronics industry was about ten to fifteen years behind those of the industrialized nations. Key problems were the inability to transfer technology from research to production and continued reliance on hand labor. Also, impatience to reach Western standards sometimes proved counterproductive. For example, instead of buying a complex item such as a microprocessor abroad, China chose to develop its own, at great expense. In 1985 the electronics industry consisted of approximately 2,400 enterprises, 100 research institutions, 4 institutes of higher learning, and 20 secondary vocational schools. The industry employed some 1.36 million people, including 130,000 technical personnel. Besides the approximately 2,000 types of electronic components and large-scale integrated circuits produced by the industry, it made 400 varieties of electronic machinery, including electronic computers, television broadcast transmitters and receivers, and radar and communications equipment. In the 1980s China made great strides in the production of consumer electronic products such as televisions, radios, and tape recorders. Chemicals China's chemical industry evolved from a negligible base in 1949, grew substantially in the 1950s and early 1960s, and received major emphasis in the late 1960s and 1970s. In 1984 chemical products served primarily agriculture and light industry. The three main areas of chemical manufacturing are chemical fertilizers, basic chemicals, and organically synthesized products. Chemical fertilizer was consistently regarded as the key to increased agricultural output. The output of many chemical products rose steadily, sometimes dramatically, from 1978 to 1984. Except for a few items, such as soda ash and synthetic rubber, the great majority of chemical products, including fertilizer, came from small factories. Small-scale plants could be built more quickly and inexpensively than large, modern plants and were designed to use low-quality local resources, such as small deposits of coal or natural gas. They also minimized demands on the overworked transportation system. Larger and more modern fertilizer plants were located in every municipality, province, and autonomous region. In the early 1970s, China negotiated contracts with foreign firms for construction of thirteen large nitrogenous-fertilizer plants. By 1980 all thirteen plants had been completed, and ten were fully operational. From 1980 to 1984 many inefficient fertilizer plants were shut down, and by 1984 additional plants were being built with the most advanced equipment available. To capitalize on China's rich mineral resources, the new plants were being constructed close to coal, phosphate, and potassium deposits. Compared with advanced countries, China's chemical fertilizers lacked phosphate and potassium, and contained too much nitrogen. To boost supplies of phosphate and potassium, China relied heavily on imports during the Sixth Five-Year Plan. Basic chemical production grew rapidly after 1949. In 1983 production of sulfuric acid was approximately 8.7 million tons with major production centers in Nanjing and Luda, and large plants at many chemical-fertilizer complexes. Soda-ash output in 1984 was 1.88 million tons, with production concentrated near major sources of salt, such as large coastal cities, Sichuan and Qinghai provinces, and the Nei Monggol Autonomous Region. Production of caustic soda was scattered at large facilities in Dalian, Tianjin, Shanghai, Taiyuan, Shenyang, and Chongqing. In 1984 output of caustic soda was 2.22 million tons. Nitric acid and hydrochloric acid were produced in the northeast, in Shanghai, and in Tianjin. The chemical industry's organic-synthesis branch manufactured plastics, synthetic rubber, synthetic fibers, dyes, pharmaceuticals, and paint. Plastics, synthetic rubber, and synthetic fibers such as nylon were particularly important in the modernization drive because they were used to produce such basic consumer goods as footwear and clothing. From 1979 to 1983, plastics production grew from 793,000 to 1.1 million tons and chemical fibers from 326,300 to 540,000 tons. The major centers for organic synthesis included Shanghai, Jilin, Beijing, Tianjin, Taiyuan, Jinxi, and Guangzhou. The industry received large amounts of foreign machinery in the 1970s. Building Materials Large-scale capital construction dramatically increased the demand for building materials. Like the chemical fertilizer industry, cement production featured simultaneous development of small-scale plants and large, modern facilities. Widespread construction of small-scale cement plants began in 1958. By the mid-1970s, these plants existed in 80 percent of China's counties; in 1984 they accounted for a major share of national cement output. These local plants varied widely in size and technology. In 1983 China produced approximately 108 million tons of cement, second in the world to the Soviet Union. In 1984 production increased 14 percent, to 123 million tons and, except for Xizang and Ningxia Hui autonomous regions, every province, autonomous region, and municipality had plants capable of producing 500,000 tons of cement per year. China's building-materials industry developed rapidly and reached an output value of -Y28.7 billion in 1984. It manufactured over 500 types of products and employed approximately 3.8 million people in 1984. These materials were used in the metallurgy, machinery, electronics, aviation, and national-defense industries, and civil engineering projects. The main production centers for building materials were Beijing, Wuhan, and Harbin. By the mid-1980s, China was one of the world's primary producers of plate glass, a critical building material. Production in 1984 reached 48.3 million cases, and twenty urban glass factories each produced 500,000 cases annually. Three large glass plants, each having a production capacity of 1.2 million standard cases, were scheduled for completion in 1985 in Luoyang, Qinhuangdao, and Nanning. Paper In the early 1980s, China's serious shortage of productive forest combined with outdated technology to create a pulp-and-paper shortage at a time of increasing demand. From 1981 to 1986 the annual growth rate of paper production was 7.3 percent. However, in 1986 only 20 percent of paper pulp was made of wood; the remainder derived from grass fiber. China's more than 1,500 paper mills, produced approximately 45.4 million tons and over 500 different types of machine-made paper in 1986. Approximately 1 million tons of pulp and paper were imported annually. In 1986 China focused on pollution control, increased product variety, less use of fiber and chemical ingredients, and more efficient use of energy as measures to improve production. However, China also sought foreign assistance to achieve these goals. Textiles China has a long and rich history in production of silk, bast fiber, and cotton textiles. The earliest silk producer, China began exporting to West Asia and Europe around 20 B.C. Ramie, a grass used to produce woven fabrics, fish lines, and fish nets, was first cultivated around 1000 B.C. and is found in the southern provinces of Hunan, Hubei, Sichuan, Guangdong, and Guizhou, and the Guangxi Zhuang Autonomous Region. Cotton spinning and weaving was the largest domestic industry in the late nineteenth and early twentieth centuries. After a respectable but inconsistent performance from 1949 to 1978, textile production increased significantly with the introduction of the agricultural responsibility system (see Glossary) in 1979 (see Crops, ch. 6). By 1979 supplies of textiles had improved, the cloth-rationing system (in force since 1949) ended, and the industry began to flourish. From 1979 to 1984, the output value of the textile industry rose approximately 13 percent annually. In 1984 China had about 12,000 enterprises producing cotton and woolen goods, silk, linen, chemical fibers, prints and dyed goods, knitwear, and textile machinery. Textile production was 15.4 percent of the country's total industrial output value in 1984. Textile exports in 1984 (excluding silk goods) totaled US$4.15 billion, up 21.7 percent over 1983, and accounted for 18.7 percent of the nation's total export value. By 1986 textiles had replaced oil as the top foreign-exchange source. Traditionally, the coastal areas had the most modern textile equipment and facilities. Shanghai Municipality and Jiangsu Province were the nerve centers of the industry, accounting for 31.6 percent of the total gross-output value for textiles in 1983. Other major textile areas were Shandong, Liaoning, Hubei, Zhejiang, and Hebei provinces. After 1949 cotton textile production was reorganized and expanded to meet consumer needs. Cotton cultivation increased in the areas around the established spinning centers in the port cities of Shanghai, Qingdao, Tianjin, and Guangzhou. New spinning and weaving facilities opened near the inland cotton-producing regions. In 1983 China produced 4.6 millions tons of cotton, more than double the 1978 total. China still was the world's largest silk producer in 1983, manufacturing approximately 1 billion meters of silk textiles. Shanghai Municipality and Jiangsu and Zhejiang provinces were the main silk centers. That year China also produced approximately 100,000 tons of knitting wool, 140 million meters of woolen piece goods, 3.3 million tons of yarn, and 541,000 tons of chemical fibers. Food Processing Food processing made significant advances in China after 1949. The most basic improvement was nearly universal establishment of mechanized grain-milling facilities in rural production units. The processing of food into finished and packaged products also grew extensively. Although a growing number of food products were packaged for export, China's food processing capacity was relatively low in the mid-1980s. An immense variety of baked goods and candies was produced for local consumption, and most Chinese continued to resist processed foods. However, rising standards of living increased the demand for processed food because of its nutritional and hygienic advantages. The beverage industry was very large and widespread. All regions had breweries and distilleries producing beer and a variety of domestic and western alcoholic beverages. China successfully exported several varieties of beer and liquor, and domestic soft-drink production was widespread. Other Consumer Goods In the first thirty years of the People's Republic, many basic consumer goods were scarce because of the emphasis on heavy industry. However, the 1979 economic reform program resulted in a consumer goods explosion. For example, television production increased from approximately 0.5 million sets in 1978 to over 10 million by 1984. During the same period, bicycle output increased about three and one-half times, production of electric fans increased twelve-fold, and the output of radios doubled. In the first half of 1985, compared with the same period in 1984, production of television sets, washing machines, electric fans, and refrigerators increased dramatically. Refrigerators, washing machines, and televisions included imported components. In 1985 economic planners decided to limit production of refrigerators because they estimated that supply would outstrip demand by 5.9 million units in 1990. The following year, authorities curbed production of televisions because of excessive output and an emphasis on quality. -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90058 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 60 DB Rec# - 653 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH7.08 Title :CHAPTER 7.08: CONSTRUCTION Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : CONSTRUCTION Housing Construction Modern housing has been in chronic shortage in contemporary China. Housing conditions in 1949 were primitive and crowded, and massive population growth since then has placed great strains on the nation's building industry. According to 1985 estimates, 46 million additional units of housing, or about 2.4 billion square meters of floor space, would be needed by the year 2000 to house every urban family. Adequate housing was defined as an average of eight square meters of living space per capita. However, as of 1984, the average per capita living space was only 4.8 square meters. Housing specialists suggested that the housing construction and allocation system be reformed and that the eight-square-meter target be achieved in two stages: six square meters by 1990 and the additional two square meters between 1990 and 2000. To help relieve the situation, urban enterprises were increasing investment in housing for workers. In 1985 housing built by state and collective enterprises in cities and towns totaled 130 million square meters of floor space. In the countryside, housing built by farmers was 700 million square meters. Capital Construction Since the 1950s, the capital construction (see Glossary) industry has been plagued by excessive growth and compartmentalization. There were frequent cost overruns and construction delays, and resources were overtaxed. Project directors often failed to predict accurately the need for such elements as transportation, raw materials, and energy. A large number of small factories were built, providing surplus capacity at the national level but with deficient economies of scale at the plant level. Poor cooperation among ministries and provinces resulted in unnecessary duplication. Because each area strove for self-sufficiency in all phases of construction, specialization suffered. Since the early years of the People's Republic, overinvestment in construction has been a persistent problem. Fiscal reforms in 1979 and 1980 exacerbated overinvestment by allowing local governments to keep a much greater percentage of the revenue from enterprises in their respective areas. Local governments could then use the retained earnings to invest in factories in their areas. These investments, falling outside the national economic plan, interfered with the central government's control of capital investment. In 1981 the economy underwent a period of "readjustment," during which the investment budget for capital construction was sharply reduced (see _________, ch. 5). This administrative solution to overinvestment proved ineffective, and later reforms concentrated on economic measures such as tax levies to discourage investment. The issuance of interest-bearing loans instead of grants was also intended to control construction growth. Despite reforms, capital construction continued at a heated pace in 1986. The majority of the new investment was unplanned, coming from loans or enterprises' internal capital. During the Seventh Five-Year Plan, 925 medium-and large-scale projects were scheduled. The government planned to allocate -Y1.3 trillion for fixed assets, an increase of 70 percent over the Sixth Five-Year Plan. Forty percent of the funds were allocated for new projects, and the remaining 60 percent for renovation or expansion of existing facilities. Some of the projects involved were power-generating stations, coal mines, railroads, ports, airports, and raw-material production centers. -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90059 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 61 DB Rec# - 654 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH7.09 Title :CHAPTER 7.09: MINING Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : MINING Coal In the first half of the twentieth century, coal mining was more developed than most industries. Such major mines as Fushun, Datong, and Kailuan produced substantial quantities of coal for railroads, shipping, and industry. Expansion of coal mining was a major goal of the First Five-Year Plan. The state invested heavily in modern mining equipment and in the development of large, mechanized mines. The longwall mining technique was adopted widely, and output reached 130 million tons in 1957. During the 1960s and 1970s, investment in large mines and modern equipment lagged, and production fell behind the industry's growth. Much of the output growth during this period came from small local mines. A temporary but serious production setback followed the July 1976 Tangshan earthquake, which severely damaged China's most important coal center, the Kailuan mines. It took two years for production at Kailuan to return to the 1975 level. In 1987 coal was the country's most important source of primary energy, meeting over 70 percent of total energy demand. The 1984 production level was 789 million tons. More than two-thirds of deposits were bituminous, and a large part of the remainder was anthracite. Approximately 80 percent of the known coal deposits were in the north and northwest, but most of the mines were located in Heilongjiang and east China because of their proximity to the regions of highest demand (see fig. __, Coal Deposits and Major Mining Areas). Although China had one of the world's largest coal supplies, there still were shortages in areas of high demand, mainly because of an inadequate transportation infrastructure. The inability to transport domestic coal forced the Chinese to import Australian coal to south China in 1985. The industry also lacked modern equipment and technological expertise. Only 50 percent of tunnelling, extracting, loading, and conveying activities were mechanized, compared with the 95-percent mechanization level found in European nations. Iron Ore China had iron-ore reserves, totalling approximately 44 billion tons, in 1980. However, in the mid-1980s, China relied on imports because of domestic transportation and production problems. Sizable iron ore beds are distributed widely in about two-thirds of China's provinces and autonomous regions (see fig. __, Fuels, Power, Minerals and Metals, 1983). The largest quantities are found in Liaoning Province, followed by Sichuan, Hebei, Shanxi, Anhui, Hubei, Gansu, Shandong, and Yunnan provinces and the Nei Monggol Autonomous Region. In the mid-1980s, mines lacked modern excavating, transportation, and ore-beneficiation equipment. Most of the ore mined had a low iron content and required substantial refining or beneficiation before use in blast furnaces. Most mines lacked modern plants for converting low-grade iron ore into concentrated pellets. Other Minerals and Metals After 1949 geological exploration discovered deposits of more than 130 useful minerals (see fig. __, Fuels, Power, Minerals, and Metals, 1983). China is among the world leaders in proven deposits of tungsten, antimony, rare earth, molybdenum, vanadium titanium, pyrite, gypsum, barite, copper, tin, lead, zinc, aluminum, mercury, manganese, nickel, phosphorus, asbestos, fluorite, magnesite, and borax. Of these, China exported antimony, tin, and tungsten in significant quantities. In general, mineral extraction was inadequate for industrialization because of transportation bottlenecks and shortages of modern equipment for mining, smelting, and refinement. A number of important mineral products were imported despite large domestic deposits, including aluminum, copper, and zinc. Among the rare earth metals and ferroalloys, beryllium, tungsten, molybdenum, barium, manganese, mercury, niobium, zirconium, and titanium were present in large reserves and were extracted in adequate quantities. Deficiencies existed in chromium, platinum, and gold. China produced sufficient quantities of most nonmetallic minerals to meet domestic needs. Barite, fluorite, salt, and talc were available in massive reserves and were exported in large quantities. Graphite, magnesite, phosphates, and pyrite were less abundant but generally satisfied domestic demand. Sulphur deposits were large, but quality was low and imports were necessary. China is rich in uranium and has favorable geological conditions for the formation of uranium deposits. The ore is easy to mine and dress because of its relatively simple physical composition. Oil and Natural Gas Before 1949 China imported most of its oil. During the First Five-Year Plan it invested heavily in exploration and well-development. In 1959 vast reserves were discovered in Songhua Jiang-Liao He basin in northeast China. The Daqing oil field in Heilongjiang Province became operational in 1960. Daqing was producing about 2.3 million tons of oil by 1963, and it continued to lead the industry through the 1970s. Further important discoveries, including the major oil fields of Shengli, in Shandong, and Dagang, in Tianjin, enabled China to meet domestic needs and eliminate nearly all imports by the mid-1960s. In 1973, despite a steadily growing internal demand for petroleum products, output was large enough to export 1 million tons of crude oil to Japan. Exports increased to 6.6 million tons in 1974 and reached 13.5 millions tons in 1978. In 1985 exports of crude oil amounted to approximately twenty million tons, roughly 16 percent of total production. The majority of 1985 exports were to Japan, but the government also had released increasing quantities on the spot market and sent some to Singapore for refining. Although the government temporarily abandoned its drive to broaden its oil export base in 1986, 131 million tons of crude oil still were produced, an increase of 5.8 million tons over 1985. Oil reserves are large and widely dispersed. In general, development is concentrated on deposits readily accessible from major industrial and population centers (see fig. __, Fuels, Power, Minerals, and Metals, 1983). Deposits in remote areas such as the Tarim, Junggar, and Qaidam basins, remain largely unexplored. The quality of oil from the major deposits varies considerably. A few deposits, like the Shengli field, produce low-quality oil suitable mainly as fuel. Most of the oil produced in China from the big fields in the north and northeast is heavy, low in sulphur, and has a very high paraffin content, making it difficult and expensive to extract and to refine. Offshore exploration and drilling were first undertaken in the early 1970s, and it became more widespread and advanced as the decade progressed. Chinese and foreign oil experts believed that offshore deposits were extensive and could equal onshore reserves. Offshore operations relied heavily on foreign technology. In 1982 thirty-three foreign oil companies submitted bids for offshore drilling rights; twenty-seven eventually signed contracts. By the mid-1980s, when offshore exploration results were disappointing and only a handful of wells were actually producing oil, China began to emphasize onshore development. To continue offshore exploration, China established the China National Offshore Oil Corporation to assist foreign oil companies in exploring, developing, extracting, and marketing China's oil. Exploration and drilling was concentrated in areas in the South China Sea, Gulf of Tonkin, and Zhu Jiang (Pearl River) Mouth Basin in the south, and Bo Hai Bay in the north. Disputes between China and several neighboring countries complicated the future of oil development in several promising offshore locations (see Physical Environment, ch.2). Natural gas was a relatively minor source of energy. Output grew rapidly in the 1960s and 1970s. By 1985 production was approximately 12 billion cubic meters--about 3 percent of China's primary energy supply. The following year, output increased by 13 billion cubic meters. Sichuan Province possesses about half of China's natural gas reserves and annual production. Most of the remaining natural gas is produced at the Daqing and Shengli northeastern oil fields. Other gas-producing areas include the coastal plain in Jiangsu, Shanghai, and Zhejiang; the Huabei complex in Hebei Province; and the Liaohe oil field in Liaoning Province. The exact size of China's natural gas reserves was unknown. Estimates ranged from 129 billion to 24.4 trillion cubic meters. The Chinese hoped for a major discovery in the Zhongyuan Basin, a 5,180-square-kilometer area along the border of Henan and Shandong provinces. Major offshore reserves have been discovered. If successfully tapped, these could increase gas output by 50 percent. The largest unexploited natural gas potential is believed to be in Qinghai and Xinjiang. A rudimentary petroleum-refining industry was established with Soviet aid in the 1950s. In the 1960s and 1970s, this base was modernized and expanded, partially with European and Japanese equipment. In 1986 Chinese refineries were capable of processing about 2.1 million barrels a day. By 1990 China plans to reach 2.5 million barrels a day. In the 1970s, China constructed oil pipelines and improved ports handling oil tankers. The first oil pipeline was laid from Daqing to the port of Qinhuangdao; 1,150 kilometers long, it became operational in 1974. The following year the pipeline was extended to Beijing; a second line connected Daqing to the port of Luda and branched off to the Democratic People's Republic of Korea (North Korea). A pipeline from Linyi in Shandong Province to Nanjing was completed in 1978, linking the oil fields of Shengli and Huabei to ports and refineries of the lower Chang Jiang region. In 1986 plans had been made to construct a 105-kilometer pipeline linking an offshore well with the Chinese mainland via Hainan Islands. Electric and Nuclear Power From 1949 to the mid-1980s, China pursued an inconsistent policy on the development of electric power. Significant underinvestment in the readjustment period, starting in 1979, caused serious power shortages into the mid-1980s. Although China's hydroelectric power potential was the world's largest and the power capacity was the sixth largest, 1985 estimates showed that demand exceeding supply by about 40 billion kilowatt hours per year. Because of power shortages, factories and mines routinely operated at 70- to 80-percent capacity, and in some cases factories only ran for 3 or 4 days a week. Whole sections of cities were frequently blacked out for hours. China's leaders began to acknowledge the seriousness of the power shortage in 1979. The government took no positive steps until the mid-1980s, when it announced import of 10,000 megawatts of thermal power-plant capacity to serve the east's large population centers. It also launched a nationwide campaign to create an additional 5,000 megawatts of electric-power capacity. Under the Seventh Five-Year Plan, China planned to add 30,000 to 35,000 megawatts of capacity, a 55-to-80-percent increase over previous five-year plans. The leadership decided to build thermal power plants to meet the country's electricity needs, because such plants were relatively inexpensive and required construction lead-times of only three to six years. In 1985 approximately 68 percent of generating capacity was derived from thermal power, mostly coal-fired, and observers estimated that by 1990 its share would increase to 72 percent. The use of oil-fired plants peaked in the late 1970s, and by the mid-1980s most facilities had been converted back to coal. Only a few thermal plants were fueled by natural gas. Hydropower accounted for only about 30 percent of generating capacity. Observers expected that during the Seventh Five-Year Plan, China would continue to emphasize the development of thermal power over hydropower, because of the need to expand the power supply quickly to keep pace industrial growth. However, in the long term, hydropower gradually was to be given priority over thermal power. In 1986 China's total generating capacity was 76,000 megawatts: 52,000 from thermal plants and 24,000 from hydropower sources. China planned to construct large generators with capacities of 100 to 300 megawatts to increase thermal power capacity. The new, larger generators would be much more efficient than generators with capacities of only 50 megawatts or less. With the larger generators, China would only have to increase coal consumption by 40 percent to achieve a 54-percent increase in generating capacity by 1990. Foreign observers believed that as China increased its grid network it could construct power plants close to coal mines, then run power lines to the cities. This method would eliminate the costly and difficult transportation of coal to smaller urban plants, which had already created a significant pollution problem. From 1949 to 1986, China built at least 25 large, 130 medium, and about 90,000 small-sized hydropower stations. According to the Ministry of Water Resources and Electric Power, China's 1983 annual power output was 351.4 billion kilowatt hours, of which 86 billion kilowatt hours were generated by hydropower. While construction of thermal plants was designed as a quick remedy for alleviating China's power shortages, the development of hydropower resources was considered a long-term solution. The primary areas for the construction of hydropower plants were the upper Huang He,the upper and middle stream tributaries and trunk of the Chang Jiang, and the Hongshui He in the upper region of the Zhu Jiang Basin (see fig. __, Fuels, Power, Minerals, and Metals, 1983). The construction of new hydropower plants was expected to be a costly and lengthy process, undertaken with assistance from the United States, Canada, Kuwait, Austria, Norway, France, and Japan. To augment its thermal and hydropower capacity, China was developing a nuclear energy capability. China's nuclear industry began in the 1950s with Soviet assistance. Until the early 1970s, it had primarily military applications. However, in August 1972, reportedly by directive of Premier Zhou Enlai, China began developing a reactor for civilian energy needs. After Mao Zedong's death in 1976, support for the development of nuclear power increased significantly. Contracts were signed to import two French-built plants, but economic retrenchment and the Three Mile Island incident in the United States abruptly halted the nuclear program. Following three years of "investigation and demonstration," the leadership decided to proceed with nuclear power development. By 1990 China intended to commit between 60 to 70 percent of its nuclear industry to the civilian sector. By 2000 China planned to have a nuclear generating capacity of 10,000 megawatts, accounting for approximately 5 percent of the country's total generating capacity. In 1986 a 300-megawatt domestically designed nuclear power plant was under construction at Qinshan, Zhejiang Province, with completion planned for 1989. Although most of the equipment in the plant was domestic, a number of key components were imported. The Seventh Five-Year Plan called for constructing two additional 600-megawatt reactors at Qinshan. Another plant, with two 900 megawatt reactors, was under construction at Daya Bay in Guangdong Province. The Daya Bay project was a joint venture with Hong Kong, with considerable foreign loans and expertise. -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90060 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 62 DB Rec# - 655 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH7.10 Title :CHAPTER 7.10: RURAL INDUSTRY Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : RURAL INDUSTRY From 1980 to 1986, the number of rural town and township enterprises rose from 1.42 million to more than 12.2 million. There were five types of town and township enterprises: township enterprises, village enterprises, cooperative enterprises, enterprises jointly run by several households, and household enterprises. In 1986 the assets of the enterprises at the township and village levels totaled -Y134 billion. Their total output value for 1985 was -Y272.8 billion, 17 percent of the gross national output and 44 percent of gross agricultural output. Rural enterprises absorbed a large portion of the surplus agricultural labor displaced by the agricultural responsibility system and the breakdown of the commune system (see Post-Mao Policies, ch. 6). This absorption helped the state greatly by eliminating state support of millions of displaced workers. In 1986 rural enterprises employed approximately 76 million people, or 20 percent of China's total workforce. The town and township enterprises made a significant contribution to overall economic growth. In 1985 an estimated 28 percent of coal, 53 percent of construction materials, 30 percent of paper, 20 percent of textile goods, 33 percent of garments, and 75 percent of leather products came from rural enterprises. The enterprises also made extensive progress in the export market, with 8,000 export-oriented factories, of which 870 were Chinese-foreign joint ventures. In 1985 town and township enterprises earned about -Y4 billion in foreign currency. Despite the rapid growth and success of town and township enterprises, continued expansion faced obstacles in 1987. The government was trying to limit production because of economic and environmental concerns. Moreover, financial mismanagement, poor market analysis, rising energy and raw-material cost, substandard equipment, and constant interference from local government authorities hampered production and expansion. In certain areas, such as Zhejiang Province, efforts were made to solve some of the problems facing the rural enterprises. Local governments allowed the enterprises to keep 70 percent of profits, and of the remaining 30 percent remitted to the county government, 70 percent was invested in existing enterprises or used to establish new ones. -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90061 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 63 DB Rec# - 656 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH7.11 Title :CHAPTER 7.11: DEFENSE INDUSTRY Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : DEFENSE INDUSTRY China's defense industrial complex produced weapons and equipment based predominantly on Soviet designs of the 1950s and 1960s. Because of a lack of foreign exchange, a low short-term threat perception, and an emphasis on the three other modernizations (agriculture, industry, and science and technology), China had decided to develop its defense industries gradually. It would rely primarily on domestic production, importing foreign technology only in areas of critical need. The defense industries produced a wide range of military materiel. Large quantities of small arms and tanks were produced, and many were exported to Third World countries such as Iran. China had upgraded Soviet aircraft and was developing nuclear-powered ballistic-missile submarines, intercontinental ballistic missiles, and tanks equipped with infrared night-vision gear and laser rangefinders (see __________, ch. 14) Because defense was assigned the lowest priority in the Four Modernizations in the 1970s, China's large defense sector has devoted an increasing amount of its resources to civilian production. For example, in the mid-1980s approximately one-third of the ordnance industry's output was allocated to civilian production, and the share was expected to rise to two-thirds by 1990. The defense sector produced a wide variety of products, ranging from furniture to telescopes, cameras to heavy machinery. Despite the military's contribution to the industrial sector, in 1987 Chinese industry lagged far behind that of the industrialized nations. Much of industrial technology was severely outdated; severe energy shortages, transportation bottlenecks, and bureaucratic interference also hindered modernization. Although output was high in a number of industries, quality was often poor. However, China's industrial sector has made considerable progress since 1949. Output of most products has increased dramatically since the 1950s, and China now produces computers, satellites, and other high-technology items. The reform program introduced in the late 1970s brought an era of more rational economic planning and laid the groundwork for more balanced and sustained industrial growth. As of 1987, China's leaders were aware of the need for greater industrial efficiency and productivity, and were striving to achieve these goals. * * * Industrial growth prior to 1949 is outlined by John K. Chang in Industrial Development in Pre-Communist China. Thomas G. Rawski describes the development of the producer goods industries, both before and after the founding of the People's Republic, in China's Transition to Industrialism. A wealth of material on Chinese industry is found in the two-volume set of China's Economy Looks Toward the Year 2000, which includes an overview article, and specific articles relating to the structure, management, ownership and control, and finance and planning of industry. It also describes and analyzes the energy sector in detail. Volume II of the World Bank Series, China: Socialist Economic Development, contains information on industrial organization, policy, strengths and weaknesses, and issues and challenges. Another World Bank Study, China: Long-Term Development Issues and Options, looks at some of the major development issues facing China to the year 2000. Two RAND studies, Industrial Innovation in China with Special Reference to the Metallurgical Industry and Chinese Electronics Industry in Transition, are excellent case studies, documenting China's attempt to modernize its outdated industrial sector. The annual State Statistical Yearbook of China provides figures on a wide range of industrial categories. The monthly China Business Review provides well-researched articles on many topics related to industry, and the Country Report: China, North Korea, (formerly Quarterly Economic Review of China, North Korea) outlines economic events on a quarterly basis and provides annual summaries. (For further information and complete citations, see Bibliography.) -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90062 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 64 DB Rec# - 657 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH8.00 Title :CHAPTER 8.00 - TRADE AND TRANSPORTATION Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : TRADE AND TRANSPORTATION are the lifeblood of an economy. In the twenty-five years that followed the founding of the People's Republic of China in 1949, China's trade institutions and transportation and communications networks were built into a partially modern but somewhat inefficient system. The drive to modernize the economy that began in 1978 required a sharp acceleration in commodity flows and greatly improved efficiency in economic transactions. In the ensuing years economic reforms were adopted by the government to develop a "socialist planned commodity economy" that combined central planning with market mechanisms. These changes resulted in the decentralization and expansion of domestic and foreign trade institutions, a greatly enlarged role for free markets in the distribution of goods, and a prominent role for foreign trade and investment in economic development. Despite increased investment and development in the 1980s, the transportation and communications sectors were strained by the rapid expansion of production and the exchange of goods. Transportation, postal services, communications, and trade, including services, employed about 6.3 percent of the national labor force in the mid-1980s--about 22 percent of the nonagricultural labor force. Chinese statistics estimate that these sectors produced about 7.4 percent of the gross national product in 1983. -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90063 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 65 DB Rec# - 658 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH8.01 Title :CHAPTER 8.01: INTERNAL TRADE AND DISTRIBUTION Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : INTERNAL TRADE AND DISTRIBUTION Agriculture Agricultural products were distributed in three major ways in China during the 1980s. They were either retained by the household (now the primary production unit) for distribution among its members, procured by the state, or sold in free rural or urban markets. Approximately 63 percent of the population was located in rural areas, where the majority of the people worked in agriculture and rural industries. Under the responsibility system (see Glossary) for agriculture instituted in 1981, the household replaced the production team (see Glossary) as the basic production unit. Families contracted with the economic collective to farm a plot of land, delivered a set amount of grain or other produce and the agricultural tax to the state, and paid a fee to the collective. After meeting these obligations, the household was free to retain its surplus produce or sell it in free markets. Restrictions on private plots and household sideline production were lifted, and much of the production from these was also sold on free markets (see Post-Mao Policies; Planning and Organization, ch. 6). Distribution of food and other agricultural goods to urban consumers, industry, and rural areas deficient in food was carried out primarily by the state and secondarily by producers or cooperatives. The state procured agricultural goods by means of taxes in kind and by purchases by state commercial departments (state trading companies) under the Ministry of Commerce. The agricultural tax was not large, falling from 12 percent of the total value of agricultural output in 1952 to 5 percent in 1979. In 1984 the number of agricultural and sideline products subject to state planning and purchasing quotas was reduced from twenty-nine to ten and included grains, edible oil, cured tobacco, jute, hemp, and pigs. In 1985 the system of state purchasing quotas for agricultural products was abolished. Instead, the state purchased grain and cotton under contract at a set price. Once contracted quotas were met, the grain and cotton were sold on the market at floating prices. If market prices fell below the listed state price, the state purchased all available market grain at the state price to protect the interests of producers. Vegetables, pigs, and aquatic products sold to urban, mining, and industrial areas were traded in local markets according to demand. Local commercial departments set the prices of these goods according to quality to protect the interests of urban consumers. All other agricultural goods were sold on the market to the state, to cooperatives, or to other producers. Restrictions on private business activities were greatly reduced, permitting peasants as well as cooperatives to transport agricultural goods to rural and urban markets and allowing a rapid expansion of free markets in the countryside and in cities. The number of wholesale produce markets increased by 450 percent between 1983 and 1986, reaching a total of 1,100 and easing pressure on the state produce distribution network, which had been strained by the burgeoning agricultural production engendered by rural reforms. In 1986 free markets, called "commodity fairs," numbered 61,000 nationwide. Once food was procured and transported to urban areas, it was sold to consumers by state-owned stores and restaurants. In the mid-1980s food items were also available in free markets, where peasants sold their produce, and in privately owned restaurants. As noted previously, the prices of pigs, aquatic products, and vegetables were determined by local authorities according to quality and demand; prices of other products floated freely on the market. Except for grain, edible oil, and a few other rationed items, food items were in good supply. Industrial goods used in agricultural production were sold to agricultural units in the 1980s. Local cooperatives or state supply and marketing bureaus sold most agricultural producer goods, including chemical fertilizers and insecticides, to households at set prices. The state also offered preferential prices for agricultural inputs to grain farmers to encourage grain production. Households were permitted to purchase agricultural machinery and vehicles to transport goods to market. In order to ensure that rural units could cover the costs of the increasing quantities of industrial inputs required for higher yields, the government periodically reduced the prices of the industrial goods sold to farmers, while raising the procurement prices for agricultural products. In the mid-1980s, however, the price gap between agricultural and industrial products was widening to the disadvantage of farmers. Industry After 1982, reforms moved China's economy to a mixed system based on mandatory planning, guidance planning (use of economic levers such as taxes, prices, and credit instead of administrative fiat), and the free market. In late 1984 further reforms of the urban industrial economy and commerce reduced the scope of mandatory planning, increased enterprise autonomy and the authority of professional managers, loosened price controls to rationalize prices, and cut subsidies to enterprises. These changes created a "socialist planned commodity economy," essentially a dual economy in which planned allocation and distribution are supplemented by market exchanges based on floating or free prices (see Prices, ch. 5). As a result of these reforms, the distribution of goods used in industrial production was based on mandatory planning with fixed prices, guidance planning with floating prices, and the free market. Mandatory planning covered sixty industrial products, including coal, crude oil, rolled steel, nonferrous metals, timber, cement, electricity, basic industrial chemicals, chemical fertilizers, major machines and electrical equipment, chemical fibers, newsprint, cigarettes, and defense industry products. Once enterprises under mandatory planning had met the state's mandatory plans and supply contracts, they could sell surplus production to commercial departments or other enterprises. Prices of surplus industrial producer goods floated within limits set by the state. The state also had a planned distribution system for important materials such as coal, iron and steel, timber, and cement. Enterprise managers who chose to exceed planned production goals purchased additional materials on the market. Major cities established wholesale markets for industrial producer goods to supplement the state's allocation system. Under guidance planning, enterprises try to meet the state's planned goals but make their own arrangements for production and sales based on the orientation of the state's plans, the availability of raw and unfinished materials and energy supplies, and the demands on the market. Prices of products under guidance planning either are unified prices or floating prices set by the state or prices negotiated between buyers and suppliers. Production and distribution of products not included in the state's plans are regulated by market conditions. Lateral Economic Cooperation China also undertook measures to develop "lateral economic ties," that is, economic cooperation across regional and institutional boundaries. Until the late 1970s, China's planned economy had encouraged regional and organizational autarky, whereby enterprises controlled by a local authority found it almost impossible to do business with other enterprises not controlled by the same institution, a practice that resulted in economic waste and inefficiency. Lateral economic cooperation broke down some barriers in the sectors of personnel, resources, capital, technical expertise, and procurement and marketing of commodities. In order to promote increased and more efficient production and distribution of goods among regions and across institutional divisions, ties were encouraged among producers of raw and semifinished materials and processing enterprises, production enterprises and research units (including colleges and universities), civilian and military enterprises, various transportation entities, and industrial, agricultural, commercial, and foreign trade enterprises. A multitiered network of transregional economic cooperation associations also was established. The Seventh Five-Year Plan (1986-90) divided China into three regions--eastern, central, and western, each with its own economic development plans. In addition to the three major regions, three echelons of economic cooperation zones were created. The first echelon--national-level economic development zones--cut across several provincial-level boundaries and linked major economic areas. Among these were the Shanghai Economic Zone, the Northeastern Economic Zone, the energy production bases centering on Shanxi Province, the Beijing-Tianjin-Tangshan Economic Zone, and the Southwestern Economic Zone. The second-echelon network linked provincial-level capitals with designated ports and cities along vital communication lines and included the Huaihai Economic Zone (consisting of fifteen coastal prefectures and cities in Jiangsu, Anhui, Henan, and Shandong provinces) and the Zhu Jiang Delta Economic Zone centered on the southern city of Guangzhou. The third tier of zones centered on provincial-level capitals and included the Nanjing Regional Economic Cooperation Association. Smaller-scale lateral economic ties below the provincial level, among prefectures, counties, and cities, also were formed. Retail Sales Retail sales in China changed dramatically in the late 1970s and early 1980s as economic reforms increased the supply of food items and consumer goods, allowed state retail stores the freedom to purchase goods on their own, and permitted individuals and collectives greater freedom to engage in retail, service, and catering trades in rural and urban areas. Retail sales increased 300 percent from 1977 to 1985, rising at an average yearly rate of 13.9 percent--10.5 percent when adjusted for inflation. In the 1980s retail sales to rural areas increased at an annual rate of 15.6 percent, outpacing the 9.7-percent increase in retail sales to urban areas and reflecting the more rapid rise in rural incomes. In 1977 sales to rural areas comprised 52 percent of total retail sales; in 1984 rural sales accounted for 59.2 percent of the total. Consumer goods comprised approximately 88 percent of retail sales in 1985, the remaining 12 percent consisting of farming materials and equipment. The number of retail sales enterprises also expanded rapidly in the 1980s. In 1985 there were 10.7 million retail, catering, and service establishments, a rise of 850 percent over 1976. Most remarkable in the expansion of retail sales was the rapid rise of collective and individually owned retail establishments. Individuals engaged in businesses numbered 12.2 million in 1985, more than 40 times the 1976 figure. Furthermore, as state-owned businesses either were leased or turned over to collective ownership or were leased to individuals, the share of state-owned commerce in total retail sales dropped from 90.3 percent in 1976 to 40.5 percent in 1985. In 1987 most urban retail and service establishments, including state, collective, and private businesses or vendors, were located either in major downtown commercial districts or in small neighborhood shopping areas. The neighborhood shopping areas were numerous and were situated so that at least one was within easy walking distance of almost every household. They were able to supply nearly all the daily needs of their customers. A typical neighborhood shopping area in Beijing would contain a one-story department store, bookstore, hardware store, bicycle repair shop, combined tea shop and bakery, restaurant, theater, laundry, bank, post office, barbershop, photography studio, and electrical appliance repair shop. The department stores had small pharmacies and carried a substantial range of housewares, appliances, bicycles, toys, sporting goods, fabrics, and clothing. Major shopping districts in big cities contained larger versions of the neighborhood stores as well as numerous specialty shops, selling such items as musical instruments, sporting goods, hats, stationery, handicrafts, cameras, and clocks. Supplementing these retail establishments were free markets in which private and collective businesses provided services, hawked wares, or sold food and drinks. Peasants from surrounding rural areas marketed their surplus produce or sideline production in these markets. In the 1980s urban areas also saw a revival of "night markets," free markets that operated in the evening and offered extended service hours that more formal establishments could not match. In rural areas, supply and marketing cooperatives operated general stores and small shopping complexes near village and township administrative headquarters. These businesses were supplemented by collective and individual businesses and by the free markets that appeared across the countryside in the 1980s as a result of rural reforms. Generally speaking, a smaller variety of consumer goods was available in the countryside than in the cities. But the lack was partially offset by the increased access of some peasants to urban areas where they could purchase consumer goods and market agricultural items. A number of important consumer goods, including grain, cotton cloth, meat, eggs, edible oil, sugar, and bicycles, were rationed during the 1960s and 1970s. To purchase these items, workers had to use coupons they received from their work units. By the mid-1980s rationing of over seventy items had been eliminated; production of consumer goods had increased, and most items were in good supply. Grain, edible oil, and a few other items still required coupons. In 1985 pork rationing was reinstated in twenty-one cities as supplies ran low. Pork was available at higher prices in supermarkets and free markets. -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90064 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 66 DB Rec# - 659 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH8.02 Title :CHAPTER 8.02: FOREIGN TRADE Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : FOREIGN TRADE History of Chinese Foreign Trade Chinese foreign trade began as early as the Western Han dynasty (206 B.C.-A.D. 9), when the famous "silk route" through Central Asia was pioneered by Chinese envoys (see The Imperial Era, ch. 1). During later dynasties, Chinese ships traded throughout maritime Asia, reaching as far as the African coast, while caravans extended trade contacts in Central Asia and into the Middle East. Foreign trade was never a major economic activity, however, and Chinese emperors considered the country to be entirely self-sufficient. During parts of the Ming (1368-1644) and Qing (1644-1911) dynasties, trade was officially discouraged. In the nineteenth century, European nations used military force to initiate sustained trade with China. From the time of the Opium War (1839-42) until the founding of the People's Republic in 1949, various Western countries and, starting in the 1890s, Japan compelled China to agree to a series of unequal treaties that enabled foreigners to establish essentially autonomous economic bases and operate with privileged status in China. Foreign privileges were abolished when the People's Republic came into being (see Emergence of Modern China, ch. 1). Foreign trade did not account for a large part of the Chinese economy for the first thirty years of the People's Republic. As in most large, continental countries, the amount of commerce with other nations was small relative to domestic economic activity. During the 1950s and 1960s, the total value of foreign trade was only about 2 percent of the gross national product (GNP). In the 1970s trade grew rapidly but in 1979 still amounted to only about 6 percent of GNP. The importance of foreign trade in this period, however, far exceeded its volume. Foreign imports alleviated temporary but critical shortages of food, cotton, and other agricultural products as well as long-term deficiencies in a number of essential items, including raw materials such as chrome and manufactured goods such as chemical fertilizer and finished steel products. The acquisition of foreign plants and equipment enabled China to utilize the more advanced technology of developed countries to speed its own technological growth and economic development. During the 1950s China imported Soviet plants and equipment for the development program of the First Five-Year Plan (1953-57). At the same time, the Chinese government expanded exports of agricultural products to repay loans that financed the imports (see The First Five-Year Plan, ch. 5). Total trade peaked at the equivalent of US$4.3 billion in 1959, but a sudden decline in agricultural production in 1959-61 required China's leaders to suspend further imports of machinery to purchase foreign grain. Under a policy of "self-reliance," in 1962 total trade declined to US$2.7 billion. As the economy revived in the mid-1960s, plants and equipment again were ordered from foreign suppliers, and substantial growth in foreign trade was planned. But in the late 1960s, the chaos and antiforeign activities of the Cultural Revolution (1966-76; see Glossary) caused trade again to decline. The pragmatic modernization drive led by party leaders Zhou Enlai and Deng Xiaoping and China's growing contacts with Western nations resulted in a sharp acceleration of trade in the early 1970s. Imports of modern plants and equipment were particularly emphasized, and after 1973 oil became an increasingly important export. Trade more than doubled between 1970 and 1975, reaching US$13.9 billion. Growth in this period was about 9 percent a year. As a proportion of GNP, trade grew from 1.7 percent in 1970 to 3.9 percent in 1975. In 1976 the atmosphere of uncertainty resulting from the death of Mao and pressure from the Gang of Four (see Glossary), whose members opposed reliance on foreign technology, brought another decline in trade. Beginning in the late 1970s, China reversed the Maoist economic development strategy and, by the early 1980s, had committed itself to a policy of being more open to the outside world and widening foreign economic relations and trade. The opening up policy led to the reorganization and decentralization of foreign trade institutions, the adoption of a legal framework to facilitate foreign economic relations and trade, direct foreign investment, the creation of special economic zones (see Glossary) and "open cities," the rapid expansion of foreign trade, the importation of foreign technology and management methods, involvement in international financial markets, and participation in international foreign economic organizations. These changes not only benefited the Chinese economy but also integrated China into the world economy. In 1979 Chinese trade totaled US$27.7 billion--6 percent of China's GNP but only 0.7 percent of total world trade. In 1985 Chinese foreign trade rose to US$70.8 billion, representing 20 percent of China's GNP and 2 percent of total world trade and putting China sixteenth in world trade rankings. Trade Policy in the 1980s Under the policy of opening up to the outside world, exports, imports, and foreign capital were all assigned a role in promoting economic development. Exports earned foreign currency, which was used to fund domestic development projects and to purchase advanced foreign technology and management expertise. Imports of capital goods and industrial supplies and foreign loans and investment were used to improve the infrastructure in the priority areas of energy, transportation, and telecommunications and to modernize the machine-building and electronics industries. To earn more foreign currency and to conserve foreign exchange reserves, foreign capital was also used to expand production of export commodities, such as textiles, and of import substitutes, such as consumer goods. China has adopted a variety of measures to promote its foreign economic relations, maximizing the role of imports, exports, and foreign capital in economic development. Foreign trade organizations were reorganized, and control of imports and exports was relaxed or strengthened depending on the balance of trade and the level of foreign exchange reserves. Heavy purchases of foreign plants and equipment resulted in import restraint from 1980 to 1983. Because of the expansion of exports in the mid-1980s, a large foreign reserve surplus, and the decentralized management of foreign trade, imports surged. Huge, uncontrolled purchases of consumer goods led to trade deficits in 1984 and 1985, resulting in the introduction of an import and export licensing system, stricter controls on foreign exchange expenditures, and the devaluation of the yuan in order to reduce the trade deficit and ensure that machinery, equipment, and semifinished goods, rather than consumer goods, were imported. In 1985 China had foreign exchange reserves of US$11.9 billion. China joined a number of international economic organizations, becoming a member of the World Bank, the International Monetary Fund, the Asian Development Bank, the General Agreement on Tariffs and Trade (GATT), and the Multi-Fiber Agreement. China became an observer of GATT in 1982 and formally applied to participate as a full member in July 1986. China also reversed its aversion to foreign capital, borrowing money from international lending organizations, foreign governments, and foreign commercial banks and consortia and permitting foreign banks to open branches in China. The Chinese government maintained a good credit rating internationally and did not pile up huge foreign debts like many other communist and developing countries. Between 1979 and 1985, China signed loans totaling US$20.3 billion, US$15.6 billion of which it already had used. Most loans went into infrastructure projects, such as energy and transportation, and funded raw materials imports. The Bank of China, the principal foreign exchange bank, established branches overseas and participated in international financial markets in Eurobonds and loan syndication. Legal and institutional frameworks to facilitate foreign investment and trade also were created. Laws on taxation, joint ventures, foreign investments, and related areas were promulgated to encourage foreign investment. In 1979 China created four special economic zones in Shenzhen, Zhuhai, Shantou (in Guangdong Province), and Xiamen (in Fujian Province). The special economic zones essentially were export-processing zones designed to attract foreign investment, expand exports, and import technology and expertise. In 1984 fourteen coastal cities were designated "open cities." These too were intended to attract foreign funds and technology. But in 1985 the government decided to concentrate resources on only four of the cities: Dalian, Guangzhou, Shanghai, and Tianjin. Although the special economic zones and open cities had the power to grant investment incentives, problems with the red tape, bureaucratic interference, and lack of basic infrastructure resulted in less foreign investment and fewer high- technology projects than initially envisioned. From 1979 to 1985, China received US$16.2 billion in foreign investment and used US$4.6 billion of that amount. By 1986 China had over 6,200 foreign-funded businesses, including 2,741 joint ventures, 3,381 cooperatively managed businesses, and 151 enterprises with sole foreign investment. Of the joint ventures, 70 percent were in production enterprises (manufacturing or processing) and 30 percent were service industries (primarily hotels or tourism). Hong Kong provided 80 percent of the joint-venture partners, the United States 7 percent, and Japan 6 percent. Organization of Foreign Trade The increasingly complex foreign trade system underwent expansion and decentralization in the late 1970s and 1980s. In 1979 the Ministry of Foreign Trade's nine foreign trade corporations lost their monopoly on import and export transactions as the industrial ministries were permitted to establish their own foreign trade enterprises. The provincial branch corporations of the state foreign trade corporations were granted more autonomy, and some provinces, notably Fujian, Guangdong, and the special municipalities of Beijing, Tianjin, and Shanghai were permitted to set up independent, provincial-level import-export companies. Some selected provincial enterprises were granted autonomy in foreign trade decisions. In 1982 the State Council's Import-Export Control Commission, Foreign Investment and Control Commission, Ministry of Foreign Trade, and Ministry of Foreign Economic Relations were merged to form the Ministry of Foreign Economic Relations and Trade. In 1984 the foreign trade system underwent further decentralization. Foreign trade corporations under this and other ministries and under provincial-level units became independent of their parent organizations and were responsible for their own profits and losses. An agency system for foreign trade also was established, in which imports and exports were handled by specialized enterprises and corporations acting as agents on a commission basis. Ministry of Foreign Economic Relations and Trade The main functions of the Ministry of Foreign Economic Relations and Trade were to establish and supervise foreign trade policies; to work with the State Planning Commission in setting long-term foreign trade plans and annual quotas for imports and exports; to control imports and exports through licenses and quotas; to supervise the management of foreign trade corporations and enterprises; and to coordinate economic and trade relations with foreign governments and international economic organizations. The ministry also undertook international market research, led institutes of foreign economic relations and trade, and directed the General Administration of Customs. Foreign Trade Corporations and Enterprises In the late 1980s China had numerous specialized national corporations handling import and export transactions in such areas as arts and crafts, textiles, "native produce" and animal byproducts, foodstuffs of various kinds, chemicals, light industrial products, metals and minerals technology, industrial machinery and equipment, petrochemical and petroleum products, scientific instruments, aerospace technology and services, ships, and weapons (see table 2, Appendix B). Although nominally supervised by the Ministry of Foreign Economic Relations and Trade each of these corporations was responsible for its own profits and losses. Included among these enterprises, for example, was the Great Wall Industrial Corporation, which imported and exported transportation vehicles, satellites and other products associated with aerospace programs, mechanical equipment, electrical products, hardware and tools, medical apparatus, and chemicals. China Northern Industrial Corporation, subordinate to the Ministry of Ordnance Industry, used military production facilities to manufacture civilian products for export. The business activities of China Northern Industrial Corporation included the sale of heavy machinery, hardware and tools, and heavy-duty vehicles; light chemical industry products, such as plastic, paints, and coatings; and high-precision machinery and optical and optical-electronic equipment. Other corporations offered a variety of professional consulting services. One of these, the China International Economic Consultants Corporation, provided economic and legal expertise on investment and other economic activities. Financial Transactions and Investment Foreign exchange and reserves were controlled in the mid-1980s by the State Administration of Exchange Control under the People's Bank of China, the central bank. Foreign exchange allocations to banks, ministries, and enterprises were all approved by the State Administration of Exchange Control. The Bank of China, the foreign exchange arm of the People's Bank of China, lost its monopoly on all foreign exchange transactions in 1984 when the Agricultural Bank, People's Construction Bank, China Industrial and Commercial Bank, and China International Trust and Investment Corporation (CITIC) were permitted to deal in foreign currency. The Bank of China remained China's principal foreign exchange bank and provided loans for production and commercial transactions related to exports, set up branches overseas, maintained correspondent relations with foreign banks, and did research on international monetary trends. The Bank of China also was active in international financial markets through such activities as loan syndication and issuing of foreign bonds. CITIC, formed in 1979 to facilitate foreign investment in China, also borrowed and lent internationally and issued foreign bonds in addition to encouraging and participating in joint ventures, importing foreign technology and equipment, and making overseas investments. In 1986 CITIC was renamed CITIC Group and shifted its emphasis to power, metallurgical, and raw materials industries, which had trouble attracting investments. In late 1986 the CITIC Group had set up 47 joint ventures, invested in 114 domestic companies, and issued US$550 million in foreign bonds. The China Investment Bank was established in 1981 as a channel for medium- and long-term loans from international financial institutions such as the World Bank. Other Organizations Involved in Trade The State Council's State Planning Commission and State Economic Commission were involved in long-term planning for the development of foreign trade, and they developed national priorities for imports and exports. Several other organizations under the State Council were also involved in foreign trade matters: the Special Economic Zones Office, State Import and Export Commodities Inspection Administration, General Administration of Customs, and China Travel and Tourism Bureau. The China Council for the Promotion of International Trade (CCPIT) assisted the Ministry of Foreign Economic Relations and Trade in foreign trade relations. CCPIT handled trade delegations to and from China, organized foreign trade exhibitions in China and Chinese exhibitions in other countries, and published periodicals promoting Chinese trade. The People's Insurance Company of China expanded its operations in 1980 for the purpose of encouraging foreign trade. New categories of coverage offered to foreign firms included compensatory trade, satellite launching, nuclear power plant safety, offshore oil development insurance, insurance against contract failure, and insurance against political risk. Composition of Foreign Trade The dominant pattern of foreign trade after 1949 was to import industrial producer goods from developed countries and to pay for them with exports of food, crude materials, and light manufactures, especially textiles. The pattern was altered as circumstances demanded; in the period of economic collapse following the Great Leap Forward (1958-60; see Glossary), food imports increased from a negligible amount in 1959 to 39 percent of all imports in 1962. At the same time, imports of machinery and equipment dropped from 41 percent to 5 percent of the total. From this time on, food and live animals remained a significant, although declining, share of imports, amounting to 14.8 percent of the total in 1980 but dropping to 4.1 percent in 1985. The pattern also shifted over time as China's industrial sector expanded, gradually increasing the share of exports accounted for by manufactured goods. Manufactures provided only 30 percent of all exports in 1959, 37.9 percent in 1975, and grew to 44.9 percent in 1985. Important changes occurred in several specific trade categories in the 1970s and 1980s (see table 17, Appendix A). Imports of textile fibers rose from 5.8 percent in 1975 to 10.7 percent in 1980 as the Chinese textile industry grew faster than domestic cotton supplies but then fell to 4 percent in 1985 as domestic cotton production increased. Imports of unfinished textile products also increased from 1.3 percent in 1975 to 5.3 percent in 1985 as a result of textile industry growth. Iron and steel accounted for approximately 20 percent of imports in the 1970s, fell to 11.6 percent in 1980, then rose to 14.9 percent in 1985. Imports of manufactured goods, machinery, and transportation equipment represented 62.6 percent of total import value in 1975, fell to 53.9 percent in 1980 as imports were cut back during the "period of readjustment" of the economy (1979-81), and rose again to 75.2 percent in 1985. On the export side, the share of foodstuffs fell to 12.5 percent in 1985. The fastest growing export item in the 1970s was petroleum, which was first exported in 1973. Petroleum rocketed to 12.1 percent of all exports in 1975, 22 percent in 1980, and 21.2 percent in 1985. In the 1980s textile exports grew rapidly. Although exports of unfinished textiles remained about 14 percent of total exports, all categories of textile exports rose from 5 percent in 1975 to 18.7 percent in 1984. In 1986 textiles replaced petroleum as China's largest single export item. Trading Partners During the 1950s China's primary foreign trading partner was the Soviet Union. In 1959 trade with the Soviet Union accounted for nearly 48 percent of China's total. As relations between the two countries deteriorated in the early 1960s, the volume of trade fell, decreasing to only just over 7 percent of Chinese trade by 1966. During the 1970s trade with the Soviet Union averaged about 2 percent of China's total, while trade with all communist countries made up about 15 percent. In 1986, despite a trade pact with the Soviet Union, Chinese-Soviet trade, according to Chinese customs statistics, amounted to only 3.4 percent of China's total trade, while trade with all communist countries fell to 9 percent of the total (see table 18, Appendix A). By the mid-1960s Japan had become China's leading trading partner, accounting for 15 percent of trade in 1966. Japan was China's most natural trading partner; it was closer to China than any other industrial country and had the best transportation links to it. The Japanese economy was highly advanced in those areas where China was weakest, especially heavy industry and modern technology, while China was well endowed with some of the important natural resources that Japan lacked, notably coal and oil. In the 1980s Japan accounted for over 20 percent of China's foreign trade and in 1986 provided 28.9 percent of China's imports and 15.2 percent of its exports. Starting in the late 1970s, China ran a trade deficit with Japan. Beginning in the 1960s, Hong Kong was consistently the leading market for China's exports and its second largest partner in overall trade. In 1986 Hong Kong received 31.6 percent of Chinese goods sold abroad and supplied about 13 percent of China's imports. Hong Kong was a major market for Chinese foodstuffs and served as a transshipment port for Chinese goods reexported to other countries. The United States banned trade with China until the early 1970s. Thereafter trade grew rapidly, and after the full normalization of diplomatic and commercial relations in 1979, the United States became the second largest importer to China and in 1986 was China's third largest partner in overall trade. Most American goods imported by China were either high-technology industrial products, such as aircraft, or agricultural products, primarily grain and cotton. Western Europe has been important in Chinese foreign trade since the mid-1960s. The Federal Republic of Germany, in particular, was second only to Japan in supplying industrial goods to China during most of this period. China followed a policy of shopping widely for its industrial purchases, and it concluded deals of various sizes with nearly all of the West European nations. In 1986 Western Europe accounted for nearly 18 percent of China's foreign trade, with imports exceeding exports. Third World countries have long served as a market for Chinese agricultural and light industrial products. In 1986 developing countries purchased about 15 percent of Chinese exports and supplied about 8 percent of China's imports. Tourism Between 1949 and 1974, the People's Republic was closed to all but selected foreign visitors. Beginning in the late 1970s, when the leadership decided to promote tourism vigorously as a means of earning foreign exchange, China quickly developed its own tourist industry. Major hotel construction programs greatly increased the number of hotels and guest houses, more historic and scenic spots were renovated and opened to tourists, and professional guides and other service personnel were trained. The expansion of domestic and international airline traffic and other tourist transportation facilities made travel more convenient. Over 250 cities and counties were opened to foreign visitors by the mid-1980s. Travelers needed only valid visas or residence permits to visit 100 locations; the remaining locales required travel permits from public security departments. In 1985 approximately 1.4 million foreigners visited China, and nearly US$1.3 billion was earned from tourism. -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90065 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 67 DB Rec# - 660 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH8.03 Title :CHAPTER 8.03: TRANSPORTATION Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : TRANSPORTATION Transportation is a major factor in China's national economy. For most of the period since 1949, however, transportation occupied a relatively low priority in China's national development. Inadequate transportation systems hindered the movement of coal from mine to user, the transportation of agricultural and light industrial products from rural to urban areas, and the delivery of imports and exports. As a result, the underdeveloped transportation system constrained the pace of economic development throughout the country. In the 1980s the updating of transportation systems was given priority, and improvements were made throughout the transportation sector (see fig. 16.) In 1986 China's transportation system consisted of long-distance hauling by railroads and inland waterways and medium-distance and rural transportation by trucks and buses on national and provincial-level highways. Waterborne transportation dominated freight traffic in east, central, and southwest China, along the Chang Jiang (Yangtze River) and its tributaries, and in Guangdong Province and Guangxi-Zhuang Autonomous Region, served by the Zhu Jiang (Pearl River) system. All provinces, autonomous regions, and special municipalities, with the exception of Xizang Autonomous Region (Tibet), were linked by railroads. Many double-track lines, electrified lines, special lines, and bridges were added to the system. Subways were operating in Beijing and Tianjin, and construction was being planned in other large cities. National highways linked provincial-level capitals with Beijing and major ports. Roads were built between large, medium, and small towns as well as between towns and railroad connections. The maritime fleet made hundreds of port calls in virtually all parts of the world, but the inadequate port and harbor facilities at home still caused major problems. Civil aviation underwent tremendous development during the 1980s. Domestic and international air service was greatly increased. In 1985 the transportation system handled 2.7 billion tons of goods. Of this, the railroads handled 1.3 billion tons; highways handled 762 million tons; inland waterways handled 434 million tons; ocean shipping handled 65 million tons; and civil airlines handled 195,000 tons. The 1985 volume of passenger traffic was 428 billion passenger-kilometers. Of this, railroad traffic accounted for 241.6 billion passenger-kilometers; road traffic, for 157.3 billion passenger-kilometers; waterway traffic, for 17.4 billion passenger-kilometers; and air traffic, for 11.7 billion passenger-kilometers. Ownership and control of the different elements of the transportation system varied according to their roles and their importance in the national economy. The railroads were owned by the state and controlled by the Ministry of Railways. In 1986 a contract system for the management of railroad lines was introduced in China. Five-year contracts were signed between the ministry and individual railroad bureaus that were given responsibility for their profits and losses. The merchant fleet was operated by the China Ocean Shipping Company (COSCO), a state-owned enterprise. The national airline was run by the General Administration of Civil Aviation of China (CAAC). Regional airlines were run by provincial-level and municipal authorities. Highways and inland waterways were the responsibilities of the Ministry of Communications. Trucking and inland navigation were handled by government-operated transportation departments as well as by private enterprises. Transportation was designated a top priority in the Seventh Five-Year Plan (1986-90). Under the plan, transportation-related projects accounted for 39 of 190 priority projects. Because most were long-term development projects, a large number were carried over from 1985, and only a few new ones were added. The plan called for an increase of approximately 30 percent in the volume of various kinds of cargo transportation by 1990 over 1985 levels. So each mode of transportation would have to increase its volume by approximately 5.4 percent annually during the 5-year period. The plan also called for updating passenger and freight transportation and improving railroad, waterways, and air transportation. To achieve these goals, the government planned to increase state and local investment as well as to use private funds. The Seventh Five-Year Plan gave top priority to increasing the capacity of existing rail lines and, in particular, to improving the coal transportation lines between Shanxi Province and other provincial-level units and ports and to boosting total transportation capacity to 230 million tons by 1990. Other targets were the construction of 3,600 kilometers of new rail lines, the double-tracking of 3,300 kilometers of existing lines, and the electrification of 4,000 kilometers of existing lines. Port construction also was listed as a priority project in the plan. The combined accommodation capacity of ports was to be increased by 200 million tons, as compared with 100 million tons under the Sixth Five-Year Plan (1981-85). Priority also was given to highway construction. China planned to build new highways and rebuild existing highways to a total length of 140,000 kilometers. At the end of the Seventh Five-Year Plan, the total length of highways was to be increased to 1 million kilometers from the existing 940,000 kilometers. Air passenger traffic was to be increased by an average of 14.5 percent annually over the 5-year period, and air transportation operations were to be decentralized. Existing airports were to be upgraded and new ones built. Railroads China's first railroad line was built in 1876. In the 73 years that followed, 22,000 kilometers of track were laid, but only half were operable in 1949. Between 1949 and 1985, more than 30,000 kilometers of lines were added to the existing network, mostly in the southwest or coastal areas where previous rail development had been concentrated. By 1984 China had 52,000 kilometers of operating track, 4,000 kilometers of which had been electrified. All provinces, autonomous regions, and special municipalities, with the exception of Xizang Autonomous Region, were linked by rail. Many double-track lines, electric lines, special lines, and railroad bridges were added to the system. Railroad technology also was upgraded to improve the performance of the existing rail network. There still were shortcomings, however. Most of the trunk lines were old, there was a general shortage of double-track lines, and Chinese officials admitted that antiquated management techniques still were being practiced. There were plans in the late 1980s to upgrade the rail system, particularly in east China, in the hope of improving performance. China's railroads are heavily used. In 1986, the latest year for which statistics were available, railroads carried 1 billion passengers and 1.3 billion tons of cargo. The average freight traffic density was 15 million tons per route-kilometer, double that of the United States and three times that of India. Turnaround time between freight car loadings averaged less than four days. Between 1980 and 1985, China built about 3,270 kilometers of new track, converted 1,581 kilometers to double track, and electrified 2,500 kilometers of track. The total investment in this period amounted to over -Y21.4 billion (for value of the yuan--see Glossary). Railroads accounted for over two-thirds of the total ton-kilometers and over half the passenger-kilometers in China's transportation systems. China's longest electrified double-track railroad, running from Beijing to Datong, Shanxi Province, was opened for operation in 1984. One of the world's highest railroads, at 3,000 meters above sea level in Qinghai Province, also went into service in the same year, and improved doubletrack railroads, some of them electrified, offered a fast way to transport coal from Shanxi Province to the highly industrialized eastern part of the country and the port of Qinhuangdao for export. Production and maintenance of modern locomotives also made an important contribution to increased rail capacity. Manufacturing output in the mid-1980s increased significantly when production of electric and diesel locomotives for the first time exceeded that of steam-powered ones. China hoped, in the long-run, to phase out its steam-powered locomotives. In the mid-1980s China had more than 280,000 freight cars and about 20,000 passenger cars. The country still was unable, however, to meet the transportation needs brought about by rapid economic expansion. Subways China's first subways opened to traffic in Beijing in 1970, and Tianjin in 1980, respectively, and subway systems were planned for construction in Harbin, Shanghai, and Guangzhou beginning in the 1980s. In its first phase, the Beijing subway system had 23.6 kilometers of track and 17 stations. In 1984 the second phase of construction added 16.1 kilometers of track and 12 stations, and in 1987 additional track and another station were added to close the loop on a now circular system. In 1987 there were plans to upgrade the signaling system and railcar equipment on seventeen kilometers of the first segment built. The subway carried more than 100 million passengers in 1985, or about 280,000 on an average day and 450,000 on a peak day. In 1987 this accounted for only 4 percent of Beijing's 9 million commuters. The Beijing subway authorities estimated that passenger traffic would increase 20 percent yearly. To accommodate the increase in riders, Beijing planned to construct an extension of a seven-kilometer subway line under Chang'an Boulevard, from Fuxing Gate in the east to Jianguo Gate in the west. The Tianjin subway opened a five-kilometer line in 1980. The Shanghai subway was planned to have 14.4 kilometers of track in its first phase. Highways and Roads In 1986 China had approximately 962,800 kilometers of highways, 52,000 kilometers of which were completed between 1980 and 1985. During this period China also rebuilt 22,000 kilometers of highways in cities and rural areas. Nearly 110,000 kilometers of roads were designated part of a network of national highways, including roads linking provincial-level capitals with Beijing and China's major ports. Provincial-level and local governments were responsible for their own transportation and road construction, some with foreign expertise and financing to hasten the process. Most financing and maintenance funds came from the provincial level, supplemented in the case of rural roads by local labor. In line with the increased emphasis on developing light industry and decentralizing agriculture, roads were built in large, medium-sized, and small towns and to railroad connections, making it possible for products to move rapidly between cities and across provincial-level boundaries. In 1986 approximately 780,000 kilometers of the roads, or 81 percent, were surfaced. The remaining 19 percent (fair-weather roads) were in poor condition, hardly passable on rainy days. Only 20 percent of the roads were paved with asphalt; about 80 percent had gravel surfaces. In addition, 60 percent of the major highways needed repair. China's highways carried 660 million tons of freight and 410 million passengers in 1985. In 1984 the authorities began assigning medium-distance traffic (certain goods and sundries traveling less than 100 kilometers and passengers less than 200 kilometers) to highways to relieve the pressure on railroads. Almost 800 national highways were used for transporting cargo. Joint provincial-level transportation centers were designated to take care of cross-country cargo transportation between provinces, autonomous regions, and special municipalities. A total of about 15,000 scheduled rural buses carried 4.3 million passengers daily, and more than 2,300 national bus services handled a daily average of 450,000 passengers. The number of trucks and buses operated by individuals, collectives, and families reached 130,000 in 1984, about half the number of state-owned vehicles. In 1986 there were 290,000 private motor vehicles in China, 95 percent of which were trucks. Most trucks had a four- to five-ton capacity. The automobile was becoming an increasingly important mode of transportation in China. The automotive industry gave priority to improving quality and developing new models rather than increasing production. Nevertheless, as a result of the introduction of modern technology through joint ventures with advanced industrialized countries, Chinese automobile production for 1985 surpassed 400,000 units. Although cars and trucks were the primary means of highway transportation, in the mid-1980s carts pulled by horses, mules, donkeys, cows, oxen, and camels still were common in rural areas. Motor vehicles often were unable to reach efficient travel speeds near towns and cities in rural areas because of the large number of slow-moving tractors, bicycles, hand- and animal-drawn carts, and pedestrians. Strict adherence to relatively low speed limits in some areas also kept travel speeds at inefficient levels. Bridges In the late 1980s, China had more than 140,000 highway bridges. Their length totaled almost 4,000 kilometers. Among the best known were the Huang He (Yellow River) Bridge in Nei Monggol Autonomous Region (Inner Mongolia), the Liu Jiang Bridge in Guangxi-Zhuang Autonomous Region, the Ou Jiang Bridge in Zhejiang Province, the Quanzhou Bridge in Fujian Province, and four large bridges along the Guangzhou-Shenzhen highway. Five major bridges--including China's longest highway bridge, the 5,560-meter-long Huang He Bridge at Zhengzhou--were under construction during the mid-1980s, and a 10,282-meter-long railroad bridge across the Huang He on the Shandong-Henan border was completed in 1985. Inland Waterways Inland navigation is China's oldest form of transportation (see fig. 17). Despite the potential advantages of water transportation, it was often mismanaged or neglected in the past. Beginning in 1960 the network of navigable inland waterways decreased further because of the construction of dams and irrigation works and the increasing sedimentation. But by the early 1980s, as the railroads became increasingly congested, the authorities came to see water transportation as a much less expensive alternative to new road and railroad construction. The central government set out to overhaul the inefficient inland waterway system and called upon localities to play major roles in managing and financing most of the projects. By 1984 China's longest river, the Chang Jiang, with a total of 70,000 kilometers of waterways open to shipping on its main stream and 3,600 kilometers on its tributaries, became the nation's busiest shipping lane, carrying 72 percent of China's total waterborne traffic. An estimated 340,000 people and 170,000 boats were engaged in the water transportation business. More than 800 shipping enterprises and 60 shipping companies transported over 259 million tons of cargo on the Chang Jiang and its tributaries in 1984. Nationally, in 1985 the inland waterways carried some 434 million tons of cargo. In 1986 there were approximately 138,600 kilometers of inland waterways, 79 percent of which were navigable. The Cihuai Canal in northern Anhui Province opened to navigation in 1984. This 134-kilometer canal linking the Ying He, a major tributary of the Huai He, with the Huai He's main course, had an annual capacity of 600,000 tons of cargo. The canal promoted the flow of goods between Anhui and neighboring provinces and helped to develop the Huai He Plain, one of China's major grain-producing areas. Maritime Shipping During the early 1960s, China's merchant marine had fewer than thirty ships. By the 1970s and 1980s, maritime shipping capabilities had greatly increased. In 1985 China established eleven shipping offices and jointly operated shipping companies in foreign countries. In 1986 China ranked ninth in world shipping with more than 600 ships and a total tonnage of 16 million, including modern roll-on and roll-off ships, container ships, large bulk carriers, refrigerator ships, oil tankers, and multipurpose ships. The fleet called at more than 400 ports in more than 100 countries. The container ship fleet also was expanding rapidly. In 1984 China had only fifteen container ships. Seven more were added in 1985, and an additional twenty-two were on order. By the early 1980s, Chinese shipyards had begun to manufacture a large number of ships for their own maritime fleet. The China Shipping Inspection Bureau became a member of the Suez Canal Authority in 1984, empowering China to sign and issue seaworthiness certificates for ships on the Suez Canal and confirming the good reputation and maturity of its shipbuilding industry. In 1986 China had 523 shipyards of various sizes, 160 specialized factories, 540,000 employees, and more than 80 scientific research institutes. The main shipbuilding and repairing bases of Shanghai, Dalian, Tianjin, Guangzhou, and Wuhan had 14 berths for 10,000-ton-class ships and 13 docks. The inadequacy of port and harbor facilities has been a long-standing problem for China but has become a more serious obstacle because of increased foreign trade. Beginning in the 1970s, the authorities gave priority to port construction. From 1972 to 1982, port traffic increased sixfold, largely because of the foreign trade boom. The imbalance between supply and demand continued to grow. Poor management and limited port facilities created such backups that by 1985 an average of 400 to 500 ships were waiting to enter major Chinese ports on any given day. The July 1985 delay of more than 500 ships, for instance, caused huge losses. All of China's major ports are undergoing some construction. To speed economic development, the Seventh Five-Year Plan called for the construction by 1990 of 200 new berths--120 deep-water berths for ships above 10,000 tons and 80 medium-sized berths for ships below 10,000 tons--bringing the total number of berths to 1,200. Major port facilities were developed all along China's coast. Civil Aviation In 1987 China's civil aviation system was operated by the General Administration of Civil Aviation of China (CAAC). By 1987 China had more than 229,000 kilometers of domestic air routes and more than 94,000 kilometers of international air routes. The more than 9 million passengers and 102,000 tons of freight traffic represented a 40 percent growth over the previous year. The air fleet consisted of about 175 aircraft and smaller turboprop transports. CAAC had 274 air routes, including 33 international flights to 28 cities in 23 countries, such as Tokyo, Osaka, Nagasaki, New York, San Francisco, Los Angeles, London, Paris, Frankfurt, East Berlin, Zurich, Moscow, Istanbul, Manila, Bangkok, Singapore, Sydney, and Hong Kong. Almost 200 domestic air routes connected such major cities as Beijing, Shanghai, Tianjin, Guangzhou, Hangzhou, Kunming, Chengdu, and Xi'an, as well as a number of smaller cities. The government had bilateral air service agreements with more than 40 countries and working relations with approximately 386 foreign airline companies. CAAC also provided air service for agriculture, forestry, communications, and scientific research. The staff of CAAC was estimated at approximately 50,000 in the 1980s. The administration operated three training colleges to educate future airline personnel. In a bid to improve CAAC's services, more ticket offices were opened in major cities for domestic and international flights. In the mid-1980s regional airlines began operations under the general aegis of CAAC. Wuhan Airlines, run by the Wuhan municipal authorities, started scheduled passenger flights to Hubei, Hunan, Guangdong, and Sichuan provinces in May 1986. Xizang also planned to set up its own airline to fly to Kathmandu and Hong Kong. In the 1980s the central government increased its investment in airport construction, and some local governments also granted special funds for such projects. Lhasa Airport in Xizang, Jiamusi Airport in Heilongjiang Province, and Kashi and Yining airports in Xinjiang-Uygur Autonomous Region were expanded, and new airports were under construction in Xi'an, Luoyang, and Shenzhen. An investment of -Y500 million was planned for expanding runways and building new terminals and other airport facilities. In 1986 China had more than ninety civilian airports, of which eight could accommodate Boeing 747s and thirty-two could accommodate Boeing 737s and Tridents. -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90066 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 68 DB Rec# - 661 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH8.04 Title :CHAPTER 8.04: POSTAL SERVICES Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : POSTAL SERVICES Postal service is administered by the Ministry of Posts and Telecommunications, which was established in 1949 and reestablished in 1973 after a two-year period during which the postal and telecommunications functions had been separated and the ministry downgraded to a subministerial level. Although postal service in China goes back some 2,500 years, modern postal services were not established until 1877 by the Qing government. Development was slow; by 1949 there was only 1 post office for every 370 square kilometers. Since then the postal service has grown rapidly. In 1984 China had 53,000 post and telecommunications offices and 5 million kilometers of postal routes, including 240,000 kilometers of railroad postal routes, 624,000 kilometers of highway postal routes, and 230,000 kilometers of airmail routes. By 1985 post offices were handling 4.7 billion first-class letters and 25 billion newspapers and periodicals. In 1987, after a six-year hiatus, six-digit postal codes were ordered to be put into use. -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90067 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 69 DB Rec# - 662 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH8.05 Title :CHAPTER 8.05: TELECOMMUNICATIONS Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : TELECOMMUNICATIONS In 1987 China possessed a diversified telecommunications system that linked all parts of the country by telephone, telegraph, radio, and television. None of the telecommunications forms were as prevalent or as advanced as those in modern Western countries, but the system included some of the most sophisticated technology in the world and constituted a foundation for further development of a modern network. Historical Development When the People's Republic was founded in 1949, the telecommunications facilities in China were outdated, and many had been damaged or destroyed during the war years. In the 1950s existing facilities were repaired, and, with Soviet assistance, considerable progress was made toward establishing a long-distance telephone wire network connecting Beijing to provincial-level capitals. In addition, conference telephone service was initiated, radio communications were improved, and the production of telecommunications equipment was accelerated. Growth in telecommunications halted with the general economic collapse after the Great Leap Forward (1958-60) but revived in the 1960s after the telephone network was expanded and improved equipment was introduced, including imports of Western plants. An important component of the Fourth Five-Year Plan (1971-75) was a major development program for the telecommunications system. The program allotted top priority to scarce electronics and construction resources and dramatically improved all aspects of China's telecommunications capabilities. Microwave radio relay lines and buried cable lines were constructed to create a network of wideband carrier trunk lines, which covered the entire country. China was linked to the international telecommunications network by the installation of communications satellite ground stations and the construction of coaxial cables linking Guangdong Province with Hong Kong and Macao. Provincial-level units and municipalities rapidly expanded local telephone and wire broadcasting networks. Expansion and modernization of the telecommunications system continued throughout the late-1970s and early 1980s, giving particular emphasis to the production of radio and television sets and expanded broadcasting capabilities. Telecommunications Services In 1987 the Ministry of Posts and Telecommunications administered China's telecommunications systems and related research and production facilities. Besides postal services, some of which were handled by electronic means, the ministry was involved in a wide spectrum of telephone, wire, telegraph, and international communications (see Postal Services, this ch.). The Ministry of Radio and Television was established as a separate entity in 1982 to administer and upgrade the status of television and radio broadcasting. Subordinate to this ministry were the Central People's Broadcasting Station, Radio Beijing, and China Central Television. Additionally, the various broadcasting training, talent-search, research, publishing, and manufacturing organizations were brought under the control of the Ministry of Radio and Television. In 1986 responsibility for the movie industry was transferred from the Ministry of Culture to the new Ministry of Radio, Cinema, and Television (see Contemporary Performing Arts, ch. 4). The Chinese Communist Party's Propaganda Department coordinates the work of both telecommunications-related ministries. As of 1987 the quality of telecommunications services in China had improved markedly over earlier years. A considerable influx of foreign technology and increased domestic production capabilities had a major impact in the post-Mao period. The primary form of telecommunications in the 1980s was local and long-distance telephone service administered by six regional bureaus: Beijing (north region), Shanghai (east region), Xi'an (northwest region), Chengdu (southwest region), Wuhan (central-south region), and Shenyang (northeast region). These regional headquarters served as switching centers for provincial-level subsystems. By 1986 China had nearly 3 million telephone exchange lines, including 34,000 long-distance exchange lines with direct, automatic service to 24 cities. By late 1986 fiber optic communications technology was being employed to relieve the strain on existing telephone circuits. International service was routed through overseas exchanges located in Beijing and Shanghai. Guangdong Province had coaxial cable and microwave lines linking it to Hong Kong and Macao. The large, continuously upgraded satellite ground stations, originally installed in 1972 to provide live coverage of the visits to China by U.S. president Richard M. Nixon and Japanese prime minister Kakuei Tanaka, still served as the base for China's international satellite communications network in the mid-1980s. By 1977 China had joined Intelsat and, using ground stations in Beijing and Shanghai, had linked up with satellites over the Indian and Pacific oceans. In April 1984 China launched an experimental communications satellite for trial transmission of broadcasts, telegrams, telephone calls, and facsimile, probably to remote areas of the country. In February 1986 China launched its first fully operational telecommunications and broadcast satellite. The quality and communications capacity of the second satellite reportedly was much greater than the first. In mid-1987 both satellites were still functioning. With these satellites in place China's domestic satellite communication network went into operation, facilitating television and radio transmissions and providing direct-dial long-distance telephone, telegraph, and facsimile service. The network had ground stations in Beijing, rmqi, Hohhot, Lhasa, and Guangzhou, which also were linked to an Intelsat satellite over the Indian Ocean. Telegraph development received lower priority than the telephone network largely because of the difficulties involved in transmitting the written Chinese language. Computer technology gradually alleviated these problems and facilitated further growth in this area. By 1983 China had nearly 10,000 telegraph cables and telex lines transmitting over 170 million messages annually. Most telegrams were transmitted by cables or by shortwave radio. Cut-microwave transmission also was used. Teletype transmission was used for messages at the international level, but some 40 percent of county and municipal telegrams still were transmitted by Morse code. Apart from traditional telegraph and telephone services, China also had facsimile, low-speed data-transmission, and computer-controlled telecommunications services. These included on-line information retrieval terminals in Beijing, Changsha, and Baotou that enabled international telecommunications networks to retrieve news and scientific, technical, economic, and cultural information from international sources. High-speed newspaper-page-facsimile equipment and Chinese-character- code translation equipment were used on a large scale. Sixty-four-channel program-controlled automatic message retransmission equipment and low- or medium-speed data transmission and exchange equipment also received extensive use. International telex service was available in coastal cities and special economic zones. The Central People's Broadcasting Station controlled China's national radio network. Programming was administered by the provincial-level units. The station produced general news and cultural and educational programs. It also provided programs for minority groups in the Korean, Manchurian, Zang (Tibetan), Uygur, and Kazak languages, as well as programs directed toward Taiwan and overseas Chinese (see Glossary) listeners. Radio Beijing broadcast to the world in thirty-eight foreign languages, putonghua (see Glossary), and various dialects, including Amoy, Cantonese, and Hakka. It also provided English-language news programs aimed at foreign residents in Beijing. Medium-wave, shortwave, and FM stations reached 80 percent of the country--over 160 radio stations and 500 relay and transmission stations--with some 240 radio programs. The nationwide network of wire lines and loudspeakers transmitted radio programs into virtually all rural communities and many urban areas. By 1984 there were over 2,600 wired broadcasting stations, extending radio transmissions to rural areas outside the range of regular broadcasting stations. In 1987 China Central Television (CCTV), the state network, managed China's television programs. In 1985 consumers purchased 15 million new sets, including approximately 4 million color sets. Production fell far short of demand. Because Chinese viewers often gathered in large groups to watch publicly owned sets, authorities estimated that two-thirds of the nation had access to television. In 1987 there were about 70 million television sets, an average of 29 sets per 100 families. CCTV had four channels that supplied programs to the over ninety television stations throughout the country. Construction began on a major new CCTV studio in Beijing in 1985. CCTV produced its own programs, a large portion of which were educational, and the Television University in Beijing produced three educational programs weekly. The English-language lesson was the most popular program and had an estimated 5 to 6 million viewers. Other programs included daily news, entertainment, teleplays, and special programs. Foreign programs included films and cartoons. Chinese viewers were particularly interested in watching international news, sports, and drama (see Contemporary Performing Arts, ch. 4; The Media, ch. 10). * * * Descriptions of the evolving domestic and foreign trade systems are found in a variety of periodicals, including China Daily, Far Eastern Economic Review, Asiaweek, China Trade Report, China Business Review, and Beijing Review. Jean C. Oi's "Peasant Grain Marketing and State Procurement: China's Grain Contracting System" provides a good description of grain procurement and marketing. Useful articles on foreign trade are "China's International Trade: Policy and Organizational Change and Their Place in the `Economic Readjustment'" by Y.Y. Kueh and Christopher Howe and "Understanding Chinese Trade" by John Frankenstein. Valuable analyses of China's economic reforms and their impact on domestic and foreign trade appear in both volumes of the 1986 United States Congress Joint Economic Committee's China's Economy Looks Toward the Year 2000 and in China's Economy and Foreign Trade, 1981-85 by Nai-Ruenn Chen and Jeffrey Lee. Transportation and telecommunications developments are described in the periodicals China Transport and China Business Review. (For further information and complete citations, see -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90068 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 70 DB Rec# - 663 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH9.00 Title :CHAPTER 9.00 - SCIENCE AND TECHNOLOGY Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : IN A SPEECH to the National Science Conference in March 1978, then-Vice Premier Deng Xiaoping declared: "The crux of the Four Modernizations is the mastery of modern science and technology. Without the high-speed development of science and technology, it is impossible to develop the national economy at a high speed." For more than a century China's leaders have called for rapid development of science and technology, and science policy has played a greater role in national politics in China than in many other countries. China's scientific and technical achievements are impressive in many fields. Although the World Bank classified it in the 1980s as a low-income, developing country, China has by its own efforts developed nuclear weapons, the ability to launch and recover satellites, a supercomputer, and high-yield hybrid rice. But the development of science and technology has been uneven, and significant achievements in some fields are matched by low levels in others. The evolving structure of science and technology and frequent reversals of policy under the People's Republic have combined to give Chinese science a distinctive character. The variation in quality and achievements stems in part from a large and poorly educated rural populace and limited opportunities for secondary and college education--conditions common to all developing countries. The character of Chinese science also reflects concentration of resources in a few key fields and institutions, often with military applications. In more politically radical periods--such as the Great Leap Forward (1958-60) and the Cultural Revolution (1966-76)--efforts were made to expand the ranks of scientists and technicians by sharply reducing education and certification standards. China's leaders have involved themselves in the formulation of science policy to a greater extent than have the leaders of most countries. Science policy also has played a significant part in the struggles between contending leaders, who have often acted as patrons to different sectors of the scientific establishment. Party leaders, not themselves scientifically trained, have taken science and scientists quite seriously, seeing them as keys to economic development and national strength. Party efforts to control science to "serve production" and generate economic and military payoffs, however, have met with repeated frustrations. The frustration in turn has contributed to frequent reversals of policy and has exacerbated the inherent tension between the scientific and political elites over the goals and control of the nation's science and technology. In any economic system there are likely to be tensions and divergences of interest between managers and scientists, but in China such tensions have been extreme and have led to repeated episodes of persecution of scientists and intellectuals. Science in China has been marked by uneven development, wide variation in quality of work, high level of involvement with politics, and high degree of policy discontinuity. In the post-Mao era, the anti-intellectual policies of the Cultural Revolution have been reversed, and such top leaders as Deng Xiaoping have encouraged the development of science. But China's leaders in the 1980s remained, like their predecessors over the past 100 years, interested in science primarily as a means to national strength and economic growth. The policy makers' goal was the creation of a vigorous scientific and technical establishment that operates at the level of developed countries while contributing in a fairly direct way to agriculture, industry, and defense. The mid-1980s saw a major effort to reform the scientific and technical system through a range of institutional changes intended to promote the application of scientific knowledge to production. As in the past 100 years, policy makers and scientists grappled with such issues as the proportion of basic to applied research, the priorities of various fields of research, the limits of professional and academic freedom, and the best mechanisms for promoting industrial innovation and widespread assimilation of up-to-date technology. -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90069 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 71 DB Rec# - 664 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH9.01 Title :CHAPTER 9.01: HISTORICAL DEVELOPMENT: SCIENCE & TECHNOLOGY Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : HISTORICAL DEVELOPMENT OF SCIENCE AND TECHNOLOGY POLICY Pre-1949 Patterns Until the Ming dynasty (1368-1644), China was a world leader in technology and scientific discovery. Many Chinese inventions--paper and printing, gunpowder, porcelain, the magnetic compass, the sternpost rudder, and the lift lock for canals--made major contributions to economic growth in the Middle East and Europe. The outside world remained uninformed about Chinese work in agronomy, pharmacology, mathematics, and optics. Scientific and technological activity in China dwindled, however, after the fourteenth century. It became increasingly confined to little-known and marginal individuals who differed from Western scientists such as Galileo or Newton in two primary ways: they did not attempt to reduce the regularities of nature to mathematical form, and they did not constitute a community of scholars, criticizing each others' work and contributing to an ongoing program of research. Under the last two dynasties, the Ming (1368-1644) and the Qing (1644-1911), China's ruling elite intensified its humanistic concentration on literature, the arts, and public administration and regarded science and technology as either trivial or narrowly utilitarian (see The Confucian Legacy, ch. 3). Foreign Learning and Chinese Learning Western mathematics and science were introduced to China in the seventeenth and eighteenth centuries by Jesuit missionaries but had little impact. In the nineteenth century, the trauma of repeated defeat at the hands of Western invaders (in 1840-41 and 1860) finally convinced some Chinese leaders of the need to master foreign military technology. As part of the Self-Strengthening Movement in the 1860s, a number of foreign-style arsenals, shipyards, and associated training schools were established (see The Self-Strengthening Movement, ch. 1). The initial effort to produce steamships and artillery led, step-by-step, to recognition of the need to master metallurgy, chemistry, mathematics, physics, and foreign languages. The last decades of the century saw the establishment, under the auspices either of the imperial government or of foreign missionaries, of secondary schools and colleges teaching science, as well as the movement of Chinese students to advancd studies in Japan, the United States, and Europe. Individual Chinese students had no great difficulty mastering Western science, but the growth in their numbers and potential influence posed a challenge to the Confucian scholar-officials who dominated the imperial government and Chinese society. Such officials were reluctant to grant foreign-trained scientists and engineers a status equal to that of Confucian scholars, and they were suspicious of foreign ideas about politics and social organization, such as professional autonomy, freedom of speech and assembly, and experiments rather than written texts as validation of propositions. Nineteenth-century officials attempted to control the influx of foreign knowledge and values, distinguishing militarily useful technology, which was to be imported and assimilated, from foreign philosophy, religion, or political and social values, which were to be rejected. The slogan "Chinese learning for the essence, Western learning for utility" expressed this attitude. Although the terms were no longer used, the fundamental issue remained significant in the 1980s, as the Chinese Communist Party attempted to distinguish between beneficial foreign technology and harmful and "polluting" foreign ideas and practices. Throughout the twentieth century, China's political leaders have had a deeply ambivalent attitude toward science and technology, promoting it as necessary for national defense and national strength but fearing it as a carrier of threatening alien ideas and practices. By 1900 China's science and technology establishment, minimal though it was, already manifested several features that would characterize it throughout the twentieth century. Although China's early scientific achievements were a source of national pride, they had no direct influence on the practice and teaching of science in China, which was based on foreign models and foreign training. As a group, China's scientists, with their foreign education, foreign-language competence, and exposure to foreign ideas of science as an autonomous, international, and professional activity, formed the most cosmopolitan element of the population. China's scientists, more than their foreign counterparts, were motivated by patriotism and the desire to help their country through their work, and many deliberately chose applied over basic scientific work. Chinese intellectuals were influenced by the Confucian teachings that intellectuals had special responsibilities toward their society and should play a role in public affairs. Much scientific work was done under government patronage, direction, and funding. The government, whether imperial or republican, was interested in science for what it could contribute to national development and military power, and it saw science as a means rather than as an end in itself. The first major publisher of translations of scientific works was the Jiangnan Arsenal, founded in Shanghai in 1866, which published nearly 200 basic and applied scientific texts originally written in English, French, or German. In the first two decades of the twentieth century an increasing number of colleges and universities were founded, and growing numbers of Chinese students were educated abroad. The Science Society of China, whose membership included most of the country's leading scientists and engineers, was founded by Chinese students at Cornell University in 1914. In 1915 it began publication in China of a major journal, Kexue (Science), which was patterned on the journal of the American Association for the Advancement of Science. In 1922 the Society established a major biological research laboratory in Nanjing. The Society devoted itself to the popularization of science through an active and diverse publication program, the improvement of science education, and participation in international scientific meetings. The establishment of the Guomindang government at Nanjing in 1927 was followed by the creation of several government research and training institutions (see Republican China, ch. 1). The Academia Sinica, founded in 1928, had a dozen research institutes, whose personnel did research and advised the government. The late 1920s and early 1930s saw the establishment of many research institutes, such as the Fan Memorial Biological Institute in Beijing and the Beijing Research Laboratory, which eventually formed departments in physics, biology, pharmacology, and other fields. Most of the research institutes were characterized both by very limited funds and personnel and by productive, high- quality scientific work. By the 1930s China possessed a number of foreign-trained scientists who did research of high quality, which they published in both Chinese and foreign scientific journals. These scientists worked in the major universities or in research institutes funded by the government or foreign organizations (such as missionary groups and the Rockefeller Foundation) and were concentrated in Beijing, Nanjing, and Shanghai. Between 1937 and 1949, China's scientists and scientific work suffered the ravages of invasion, civil war, and runaway inflation. Funds to support research, never ample, almost totally disappeared, and most scientists were forced to devote most of their energies to teaching, administration, or a government job. In a change from the earlier pattern, many students opted not to return to China after foreign education, choosing instead to seek careers abroad. Soviet Influence in the 1950s After the establishment of the People's Republic in 1949, China reorganized its science establishment along Soviet lines--a system that remained in force until the late 1970s, when China's leaders called for major reforms. The Soviet model is characterized by a bureaucratic rather than a professional principle of organization, the separation of research from production, the establishment of a set of specialized research institutes, and a high priority on applied science and technology, which includes military technology. The government's view of the purpose of scientific work was set forth in the September 1949 Common Program of the Chinese People's Political Consultative Conference (see Glossary), which stated, "Efforts should be made to develop the natural sciences in order to serve the construction of industry, agriculture, and the national defense." On November 1, 1949, the Chinese Academy of Sciences was founded, amalgamating research institutes under the former Academia Sinica and Beijing Research Academy (the former Beijing Research Laboratory). In March 1951 the government directed the academy to determine the requirements of the production sector of the economy and to adjust scientific research to meet those requirements. Scientists were to engage in research with significant and fairly immediate benefits to society and to work as members of collectives rather than as individuals seeking personal fame and recognition. The Chinese Academy of Sciences was explicitly modeled on the Soviet Academy of Sciences, whose director, Sergei I. Vavilov, was consulted on the proper way to reorganize Chinese science. His book Thirty Years of Soviet Science was translated into Chinese to serve as a guide. Soviet influence also was realized through large-scale personnel exchanges. During the 1950s China sent about 38,000 people to the Soviet Union for training and study. Most of these (28,000) were technicians from key industries, but the total cohort included 7,500 students and 2,500 college and university teachers and postgraduate scientists. The Soviet Union dispatched some 11,000 scientific and technical aid personnel to China. An estimated 850 of these worked in the scientific research sector, about 1,000 in education and public health, and the rest in heavy industry. In 1954 China and the Soviet Union set up the Joint Commission for Cooperation in Science and Technology, which met annually until 1963 and arranged cooperation on over 100 major scientific projects, including those in nuclear science. When the Chinese Academy of Sciences completed a draft twelve-year plan for scientific development in 1956, it was referred to the Soviet Academy of Sciences for review. In October 1957 a high-level delegation of Chinese scientists accompanied Mao Zedong to Moscow to negotiate an agreement for Soviet cooperation on 100 of the 582 research projects outlined in the twelve-year plan. The Soviet aid program of the 1950s was intended to develop China's economy and to organize it along Soviet lines. As part of its First Five-Year Plan (1953-57), China was the recipient of the most comprehensive technology transfer in modern industrial history. The Soviet Union provided aid for 156 major industrial projects concentrated in mining, power generation, and heavy industry. Following the Soviet model of economic development, these were large-scale, capital-intensive projects. By the late 1950s, China had made substantial progress in such fields as electric power, steel production, basic chemicals, and machine tools, as well as in production of military equipment such as artillery, tanks, and jet aircraft. The purpose of the program was to increase China's production of such basic commodities as coal and steel and to teach Chinese workers to operate imported or duplicated Soviet factories. These goals were met and, as a side effect, Soviet standards for materials, engineering practice, and factory management were adopted. In a move whose full costs would not become apparent for twenty-five years, Chinese industry also adopted the Soviet separation of research from production. The adoption of the Soviet model meant that the organization of Chinese science was based on bureaucratic rather than professional principles. Under the bureaucratic model, leadership is in the hands of nonscientists, who assign research tasks in accordance with a centrally determined plan. The administrators, not the scientists, control recruitment and personnel mobility. The primary rewards are administratively controlled salary increases, bonuses, and prizes. Individual scientists, seen as skilled workers and as employees of their institutions, are expected to work as components of collective units. Information is controlled, is expected to flow only through authorized channels, and is often considered proprietary or secret. Scientific achievements are regarded as the result primarily of "external" factors such as the overall economic and political structure of the society, the sheer numbers of personnel, and adequate levels of funding. Under professional principles, which predominate in Western countries, scientists regard themselves as members of an international professional community that recruits and rewards its members according to its own standards of professional excellence. The primary reward is recognition by professional peers, and scientists participate in an elaborate network of communication, which includes published articles, grant proposals, conferences, and news of current and planned research carried by scientists who circulate from one research center to another. "Reds" Versus "Experts" in the 1950s and 1960s Tensions between scientists and China's communist rulers existed from the earliest days of the People's Republic and reached their height during the Cultural Revolution (see The Cultural Revolution Decade, 1966-76, ch. 1). In the early 1950s, Chinese scientists, like other intellectuals, were subjected to regular indoctrination intended to replace bourgeois attitudes with those more suitable to the new society. Many attributes of the professional organization of science, such as its assumption of autonomy in choice of research topics, its internationalism, and its orientation toward professional peer groups rather than administrative authorities, were condemned as bourgeois. Those scientists who used the brief period of free expression in the Hundred Flowers Campaign of 1956-57 (see Glossary)--to air complaints of excessive time taken from scientific work by political meetings and rallies or of the harmful effects of attempts by poorly educated party cadres to direct scientific work--were criticized for their "antiparty" stance, labeled as "rightists," and sometimes dismissed from administrative or academic positions (see The Transition to Socialism, 1953-57, ch. 1). The terminology of the period distinguished between "red" and "expert" (see Glossary). Although party leaders spoke of the need to combine "redness" with expertise, they more often acted as if political rectitude and professional skill were mutually exclusive qualities. The period of the Great Leap Forward saw efforts to reassign scientists to immediately useful projects, to involve the uneducated masses in such research work as plant breeding or pest control, and to expand rapidly the ranks of scientific and technical personnel by lowering professional standards. The economic depression and famine following the Great Leap Forward, and the need to compensate for the sudden withdrawal of Soviet advisers and technical personnel in 1960, brought a renewed but short-lived emphasis on expertise and professional standards in the early 1960s. The scientific establishment was attacked during the Cultural Revolution, causing major damage to China's science and technology. Most scientific research ceased. In extreme cases, individual scientists were singled out as "counterrevolutionaries" and made the objects of public criticism and persecution, and the research work of whole institutes was brought to a halt for years on end. The entire staffs of research institutes commonly were dispatched to the countryside for months or years to learn political virtue by laboring with the poor and lower-middle peasants. Work in the military research units devoted to nuclear weapons and missiles presumably continued, although the secrecy surrounding strategic weapons research makes it difficult to assess the impact of the Cultural Revolution in that sector. In the most general sense, the Cultural Revolution represented the triumph of anti-intellectualism and the consistent, decade-long deprecation of scholarship, formal education, and all the qualities associated with professionalism in science. Intellectuals were assumed to be inherently counterrevolutionary, and it was asserted that their characteristic attitudes and practices were necessarily opposed to the interests of the masses. Universities were closed from the summer of 1966 through 1970, when they reopened for undergraduate training with very reduced enrollments and a heavy emphasis on political training and manual labor. Students were selected for political rectitude rather than academic talent. Primary and secondary schools were closed in 1966 and 1967, and when reopened were repeatedly disrupted by political struggle. All scientific journals ceased publication in 1966, and subscriptions to foreign journals lapsed or were canceled. For most of a decade China trained no new scientists or engineers and was cut off from foreign scientific developments. During the decade between 1966 and 1976, China's leaders attempted to create a new structure for science and technology characterized by mass participation, concentration on immediate practical problems in agriculture and industry, and eradication of distinctions between scientists and workers. Ideologues saw research as an inherently political activity and interpreted all aspects of scientific work, from choice of topic to methods of investigation, as evidence of an underlying political line. According to this view, research served the interests of one social class or another and required the guidance of the party to ensure that it served the interest of the masses. The early 1970s were characterized by mass experimentation, in which large numbers of peasants were mobilized to collect data and encouraged to view themselves as doing scientific research. Typical projects included collecting information on new crop varieties, studying the effectiveness of locally produced insecticides, and making extensive geological surveys aimed at finding useful minerals or fossil fuels. Mao Zedong took a personal interest in earthquake prediction, which became a showcase of Cultural Revolution-style science. Geologists went to the countryside to collect folk wisdom on precursors of earthquakes, and networks of thousands of observers were established to monitor such signs as the level of water in wells or the unusual behavior of domestic animals. The emphasis in this activity, as in acupuncture anesthesia, was on immediate practical benefits, and little effort was made to integrate the phenomena observed into larger theoretical frameworks. The effects of the extreme emphasis on short-term problems and the deprecation of theory were noted by Western scientists who visited China in the mid- and late 1970s. For example, work in research institutes affiliated with the petrochemical industry was described as excessively characterized by trial and error. In one case, large numbers of substances were tried as catalysts or modifiers of the wax crystals in crude oil, and little attention was given to the underlying chemical properties of the catalytic or modifying agents. Rehabilitation and Rethinking, 1977-84 The Cultural Revolution's attacks on science and its deprecation of expertise were opposed by those within the government and party who were more concerned with economic development than with revolutionary purity. In the early 1970s, Premier Zhou Enlai and his associate Deng Xiaoping attempted to improve the working conditions of scientists and to promote research. At the January 1975 session of the Fourth National People's Congress, Zhou Enlai defined China's goal for the rest of the century as the Four Modernizations (see Glossary), that is, modernization of agriculture, industry, science and technology, and national defense. Although the policies proposed in the speech had little immediate effect, they were to become the basic guide for the post-Mao period. In 1975 Deng Xiaoping, then vice chairman of the Chinese Communist Party, vice premier of the government, and Zhou Enlai's political heir, acted as patron and spokesman for China's scientists (see Constitutional Framework, ch. 10). Under Deng's direction, three major policy documents--on science and technology, industry, and foreign trade--were drafted. Intended to promote economic growth, they called for rehabilitating scientists and experts, reimposing strict academic standards in education, and importing foreign technology. The proposals for reversing most of the Cultural Revolution policies toward scientists and intellectuals were denounced by the ideologues and followers of the Gang of Four (see Glossary) as "poisonous weeds." Zhou died in January 1976, and Deng was dismissed from all his posts in April. Deng's stress on the priority of scientific and technical development was condemned by the radicals as "taking the capitalist road." This dispute demonstrated the central place of science policy in modern Chinese politics and the link between science policies and the political fortunes of individual leaders. Some of the immediate consequences of Mao's death and the subsequent overthrow of the Gang of Four in October 1976 were the reversals of science and education policies (see The Post-Mao Period, 1976-78, ch. 1). During 1977 the more vocal supporters of the Gang of Four were removed from positions of authority in research institutes and universities and replaced with professionally qualified scientists and intellectuals. Academic and research institutions that had been closed were reopened, and scientists were summoned back to their laboratories from manual labor in the countryside. Scientific journals resumed publication, often carrying reports of research completed before everything stopped in the summer of 1966. The media devoted much attention to the value of science and the admirable qualities of scientists. It denounced the repressive and anti-intellectual policies of the deposed Gang of Four, who were blamed for the failure of China's science and technology to match advanced international levels. The news media now characterized scientists and technicians as part of society's "productive forces" and as "workers" rather than as potential counterrevolutionaries or bourgeois experts divorced from the masses. Considerable publicity went to the admission or readmission of scientists to party membership. The March 1978 National Science Conference in Beijing was a milestone in science policy. The conference, called by the party Central Committee, was attended by many of China's top leaders, as well as by 6,000 scientists and science administrators. Its main purpose was to announce publicly the government and party policy of encouragement and support of science and technology. Science and technology were assigned a key role in China's "New Long March" toward the creation of a modern socialist society by the year 2000. A major speech by Deng Xiaoping reiterated the concept of science as a productive force and scientists as workers, an ideological formulation intended to remove the grounds for the political victimization of scientists. Speeches by then-Premier Hua Guofeng and Vice Premier Fang Yi, the top government figure involved in science and technology, urged that scientists be given free rein in carrying out research as long as the work was in line with broad national priorities. Basic research was to be supported, although stress would continue to be placed on applied work, and China's scientists would be given wide access to foreign knowledge through greatly expanded international scientific and technical exchanges. By 1978 substantial progress had been made toward restoring the science and technology establishment to its pre-Cultural Revolution state. Leaders with special responsibility for science and technology joined recently rehabilitated senior scientists in looking ahead and framing sweeping and very ambitious plans for further development. The draft Eight-Year Plan for the Development of Science and Technology, discussed at the 1978 National Science Conference, called for a rapid increase in the number of research workers, for catching up to advanced international levels by the mid-1980s, and for substantial work in such fields as lasers, manned space flight, and high-energy physics. For some scientists, and perhaps for their political sponsors as well, mastering technologies and developing Chinese capabilities in the most advanced areas of science were goals in themselves, regardless of the costs or of the likely benefits to the peasants and workers. Both political leaders and media personnel seemed captivated by the vision of rapid economic growth and social transformation made possible by the wonders of science. Further, many leaders, not themselves scientifically trained, tended toward unrealistic expectations of the immediate benefits from research. This attitude, while different from the hostility to science exhibited during the Cultural Revolution, was based on a misunderstanding of the nature of scientific work and was therefore a poor foundation for science policy. The plans for rapid advance in many scientific areas were associated with equally ambitious calls for economic growth and the large-scale import of complete factories. During 1979 it became increasingly clear that China could not pay for all the imports or scientific projects wanted by all the ministries, regional authorities, and research institutes. It also became increasingly evident that those promoting the projects had overlooked financial constraints and severe shortages of scientific and technical manpower and that they lacked a comprehensive plan. In February 1981 a report of the State Science and Technology Commission reversed the overly ambitious 1978 eight-year scientific development plan and called for renewed emphasis on the application of science to practical problems and on training more scientists and engineers. As scientists and administrators confronted the problems of applying and linking research with development, they became aware of the constraints of the existing system and of the extent to which the endemic difficulties in applying scientific knowledge were consequences of the Soviet-style structure for science and industry that China had uncritically adopted in the 1950s. Attention shifted to reforming the existing system and promoting greater efficiency and better use of scarce resources, such as trained manpower. Between 1981 and 1985, a number of new journals discussed China's scientific system and suggested improvements, while national and local administrators sponsored a wide range of experimental reforms and reorganizations of research bodies. The extensive discussion and experimentation culminated in a March 1985 decision of the party Central Committee calling for thorough reform of China's science system (see The Reform Program, this ch.). -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90070 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 72 DB Rec# - 665 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH9.02 Title :CHAPTER 9.02: SCIENCE AND TECHNOLOGY IN THE 1980S Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : SCIENCE AND TECHNOLOGY IN THE 1980S The Supply of Skilled Manpower Research and development is a labor-intensive endeavor, in which the critical resource is the size and quality of the pool of trained manpower. China suffers both from an absolute shortage of scientists, engineers, and technicians and from maldistribution and misuse of those it has. Chinese statistics on the number and distribution of scientific personnel are neither complete nor consistent. According to the State Statistical Bureau, at the end of 1986 there were some 8.2 million personnel (out of 127.7 million workers) in the natural sciences working in state-owned enterprises, research institutes, and government offices. These numbers probably excluded military personnel and scientists in military research bodies, but they included support personnel in research institutes. "Scientific and technical personnel" comprised about 1.5 percent of all employed persons, but only about 350,000 of them were "research personnel." Their number had increased markedly from the 1970s as well-trained students began graduating from Chinese colleges and universities in substantial numbers and as postgraduates began returning from advanced training in foreign countries. Between 1979 and 1986, China sent over 35,000 students abroad, 23,000 of whom went to the United States. More significant than sheer numbers of scientific personnel were their quality and distribution. The total numbers masked wide variations in educational background and quality, lumping together graduates of two-year institutions or those who had attended secondary or post secondary schools during periods of low standards with those who had graduated from major institutions in the early 1960s or the 1980s, that is, before or after the period of the Cultural Revolution. The Cultural Revolution had removed an entire generation from access to university and professional training, creating a gap in the age distribution of the scientific work force. The scientific community included a small number of elderly senior scientists, often trained abroad before 1949, a relatively small group of middle-aged personnel, and a large number of junior scientists who had graduated from Chinese universities after 1980 or returned from study abroad. In the mid-1980s many of the middle-aged, middle-rank scientists had low educational and professional attainments, but generally they could be neither dismissed nor retired (because of China's practice of secure lifetime employment); nor could they be retrained, as colleges and universities allocated scarce places to younger people with much better qualifications. Scientists and engineers were concentrated in specialized research institutes, in heavy industry, and in the state's military research and military industrial facilities, which had the highest standards and the best-trained people. A very small proportion of scientists and engineers worked in light industry, consumer industry, small-scale collective enterprises, and small towns and rural areas. Research Institutes In the late 1980s, most Chinese researchers worked in specialized research institutes rather than in academic or industrial enterprises. The research institutes, of which there were about 10,000 in 1985, were, like their Soviet exemplars, directed and funded by various central and regional government bodies. Their research tasks were, in theory, assigned by higher administrative levels as part of an overall research plan; the research plan was, in theory, coordinated with an overall economic plan. Research institutes were the basic units for the conduct of research and the employment of scientists, who were assigned to institutes by government personnel bureaus. Scientists usually spent their entire working careers within the same institute. Research institutes functioned as ordinary Chinese work units, with the usual features of lifetime employment, unit control of rewards and scarce goods, and limited contact with other units not in the same chain of command (see Work Units, ch. 3). Each research institute attempted to provide its own staff housing, transportation, laboratory space, and instruments and to stockpile equipment and personnel. The limited channels for exchanges of information with other institutes often led to duplication or repetition of research. National Organization and Administration The research institutes belonged to larger systems or hierarchies, defined by the administrative bodies that directed and funded their subordinate institutes. Research institutes were grouped into five major subsystems, known in China as the "five main forces" (see fig. 18). The five subsystems were administratively distinct and had little contact or communication among them. Chinese Academy of Sciences In the late 1980s, the Chinese Academy of Sciences remained the most prestigious research agency in the natural sciences. It administered about 120 research institutes in various parts of China, with major concentrations in Beijing and Shanghai. In 1986 the academy employed 80,000 persons, over 40,000 of whom were scientific personnel. It also operated the elite Chinese University of Science and Technology, located in Hefei, Anhui Province, as well as its own printing plant and scientific instrument factory. Its institutes concentrated on basic research in many fields and did research (such as that on superconductor materials) that met international standards. The Chinese Academy of Sciences institutes employed China's best-qualified civilian scientists and had better laboratories, equipment, and libraries than institutes in the other four research systems. The academy's concentration on basic research was intended to be complemented by the work of the more numerous institutes affiliated with industrial ministries or local governments, which focused on applied research. Although nominally subordinate to the State Science and Technology Commission, the Chinese Academy of Sciences in practice reported directly to the State Council (see The State Council, ch. 10). Before 1956 the academy was directly responsible for overall science planning, and in 1987 it retained a fairly high degree of institutional autonomy and influence on national science policy. The academy provided expert advice, when asked, to the State Council and its ministries, commissions, and agencies. Its specialized research institutes also did work for the military research and development program. Additionally, it had responsibility for multidisciplinary research, monitoring the level of technology in Chinese industries and suggesting areas where foreign technology should be purchased. During the 1980s the academy repeatedly was asked to pay more attention to the needs of production and the application of knowledge. The membership of the Chinese Academy of Sciences included the nation's most senior and best-known scientists, some of whom had long-standing personal ties with senior political leaders. Such ties and the prestige of the academy helped it win favorable treatment in the state budgetary process and operate with relatively little outside interference. Its relatively privileged position generated resentment among those working in less well-funded institutes under the industrial ministries, whose workers--as well as some planners in the state administration--reportedly considered the academy both overfunded and overstaffed with theoreticians who contributed little to the national economy. State Science and Technology Commission The State Science and Technology Commission, a ministerial-level organ of the State Council, had responsibility for overseeing the work of civilian research institutes subordinate to the various industrial ministries, such as the Ministry of Electronics Industry and the Ministry of Coal Industry, or to provincial-level, prefectural, or municipal bureaus. More than 80 percent of China's 10,000 research institutes fell in this category, and their range of quality was considerable. Central planners and administrators considered the proliferation of low-quality research institutes a waste of scarce research funds, but as of mid-1987 they had not been able to overrule powerful ministries or local governments. Such institutes, which employed the majority of China's scientists and engineers, were expected to devote themselves to the application of science and to useful innovations and improvements to industrial processes and products. They had little direct contact with factories, and they reported their research results up the chain of command of their department or ministry, which was responsible for passing them on to factories. The scientists and engineers had little opportunity for interchanges with research institutes that were doing similar work but that were subordinate to a different ministry or commission. The State Science and Technology Commission also has primary responsibility for coordinating science policy with the State's planning and budgeting operations working in coordination with the State Planning Commission, the State Economic Commission, and the Ministry of Finance. The importance of science and science policy was indicated by the high state and party rank of the ministers and vice ministers placed in charge of the State Science and Technology Commission. Provincial-level units, responsible for budgeting, planning, and coordinating across administrative hierarchies, had their own science and technology commissions. The demarcation between the responsibilities of the Chinese Academy of Sciences and the State Science and Technology Commission in policy formulation and consultation was not entirely clear, and there was probably a certain degree of ambiguity and contention in their dealings with each other. The commission was apprised of the research being done at the academy institutes and approved the academy budget as a whole, but it could not direct the allocation of funds within the academy. National Defense Science, Technology, and Industry Commission Since the 1950s much of China's research and development effort has been channeled into military work. Military research facilities and factories are reported to have China's best-trained personnel, highest level of technology, and first priority for funding. Although the military sector has been shrouded in secrecy, its work evidently has resulted in the largely independent development of nuclear and thermonuclear weapons, intercontinental ballistic missiles, nuclear submarines and submarine-launched ballistic missiles, and the successful launch and recovery of communications and reconnaissance satellites. Little information on the military research sector has been made public, and secrecy has been reinforced by isolation of many military research centers in the remote deserts and mountains of China's western regions. The overall level of China's military technology is not high by international standards, and the achievements in nuclear weapons and missiles have apparently resulted from projects featuring concentrated resources, effective coordination of distinct specialties and industries, and firm leadership directed at the achievement of a single, well-defined goal. The style recalls the 1940s Manhattan Project in the United States, and the accomplishments demonstrate the effectiveness of the Soviet-style "big push" mode of organizing research and development. The military sector has developed in comparative isolation from the civilian economy, and until the 1980s its higher level of skills made little contribution to the national economy. Throughout the 1980s efforts have been made to break down some of the administrative barriers separating the military and civilian research and development systems. The military sector has been relatively privileged, and the spirit of self-reliance has been strong. Nevertheless, the rapid development of electronics and computer applications in the 1970s and 1980s rendered much of China's military industry obsolete. Consequently, pressure for more contact between the military research units and civilian institutes (which, with foreign contact and up-to-date foreign technology, may surpass the technical level of the military institutes) may be generated. In 1987 the work of the military research institutes continued to be directed by the State Council's National Defense Science, Technology, and Industry Commission (NDSTIC). The NDSTIC was created in 1982 with the merger of the National Defense Science and Technology Commission, National Defense Industries Office, and Office of the Science, Technology, and Armament Commission of the party Central Military Commission. The NDSTIC functioned in a manner similar to the State Science and Technology Commission, concentrating on high-level planning and coordination across the vertical chains of command in which military research institutes and factories are organized. Research in Colleges, Universities, and Enterprises As a consequence of China's adopting the Soviet model for the organization of science and industry--featuring strict separation of research, production, and training--little research has been done in Chinese universities. The State Education Commission has provided only limited funding to support research, and through the 1980s the scale of research at most colleges and universities has been very modest. Since 1980 a few academic research institutes have been established in such areas as computer science. The World Bank has supported a major effort to increase research in Chinese universities and to make better use of the scarce skills of faculty members. On the whole, though, universities have continued to play only a minor role in scientific research. Research institutes associated with or organized as constituent parts of productive enterprises have been quite rare and represent the smallest of the five systems of research institutes. Only the largest mines, oil fields, or factories, such as the Anshan iron and steel complex in Liaoning Province or the Yanshan petrochemical complex in Beijing, had their own research units, dedicated to solving immediate problems in production in the late 1980s. Enterprises concentrated on production, and their managers had little incentive to take the risks associated with innovation. Planning Scientific Research Since 1949 China has attempted, with mixed success, to organize research and development according to a centralized national plan. The various plans for scientific development that China has adopted since 1957 have been broad--listing topics and areas of priority without going into much detail or attempting to issue targets or dates to specific research institutes. From the 1950s through the mid-1980s, the "iron rice bowl" (see Glossary) of guaranteed employment and funding applied to research institutes and researchers as much as to any other enterprises or state-sector workers (see Economic Policies, 1949-80, ch. 5). No institute ever had its budget cut for failing to make a planned discovery, and no scientist was dismissed for failing to publish or to make progress in research. Much of the initiative in research seems to have come from below, with institutes submitting proposals for projects and funding to the State Science and Technology Commission. The commission's plans were drawn up after conferences in which scientists and directors of institutes suggested work that seemed feasible and worthwhile. The Beijing headquarters of the commission had a staff of between 500 and 1,000, not all of whom had scientific or economic backgrounds. Some of their energies were devoted to communication and coordination with other elements of the central administration, such as the State Planning Commission and the State Economic Commission. The core of the responsibility and power of the State Science and Technology Commission was in its allocation of funds for research and approval of projects. It possessed neither the manpower nor the expertise to monitor the work of the several thousand research institutes it oversaw, and of necessity it concentrated on major projects and relied on the advice of expert scientists and the regional scientific and technological commissions, which processed reports and applications for new projects. Much of its work consisted of "balancing" the competing requests for limited funds, and its decisions often were made on grounds other than scientific merit. Although China's leaders have addressed the rhetoric of centralized planning to scientific research, research activities have been more decentralized and more subject to pressures from powerful ministries and provincial-level governments. Integration of Administrative Systems In the late 1980s, two of the five research subsystems--the Chinese Academy of Sciences and the military system--were relatively privileged in receiving government financing and being supplied with scarce resources and historically had tended to form closed, self-sufficient domains. The system under the State Science and Technology Commission, which included the largest number of research institutes, was marked by wide variations in quality and a vertical, bureaucratic mode of organization that inhibited collaboration and exchange of information. Both the universities and the research institutes attached to large industrial complexes were short of funds and out of the mainstream of research. Overall, China's science and technology structure was marked by lopsided distribution of skilled manpower, pervasive fragmentation, compartmentalization, and duplication of research--an outcome of the 1950s decision to adopt a bureaucratic mode of organization for science and technology. Chinese policy makers were well aware of these problems and, over the years, had responded with two forms of organizational remedies: high-level coordinating bodies and mass scientific associations that cut across administrative boundaries. Leading Group for Science and Technology The growth of China's scientific system and the tendencies toward compartmentalization inherent in the Soviet mode of scientific and industrial organization, which it emulated, were matched by the creation of administrative bodies intended to coordinate the activities of vertically organized administrative hierarchies. Both the State Science and Technology Commission and the NDSTIC, which were formed by the amalgamation of earlier coordinating bodies founded as long ago as the mid-1950s, had this primary function. Efforts to fill the need for progressively more authoritative and comprehensive coordination culminated in the establishment of the State Council's Leading Group for Science and Technology in January 1983. The leading group, a special-purpose task force formed by the State Council to address problems that cut across administrative boundaries, was China's highest-level policy-making organ for science and technology. In 1987 its chairman was Premier Zhao Ziyang, and its membership included Fang Yi, state councillor and former head of the State Science and Technology Commission and the Chinese Academy of Sciences, and leading members of the State Science and Technology Commission, NDSTIC, State Planning Commission, State Economic Commission, State Education Commission, Chinese Academy of Sciences, and Ministry of Labor and Personnel. That the leading group was headed by the premier indicated both the significance China's leaders attached to science policy and the level of authority necessary to settle disputes and encourage cooperation. China Association of Science and Technology At the lower end of the administrative hierarchy, communication and cooperation were intended to be promoted by professional organizations, whose membership cut across administrative boundaries. The primary organization was the China Association of Science and Technology, a nongovernment mass organization. Because it was funded by the government and, like all organizations in China, directed by party cadres, its autonomy had strict limits. The China Association of Science and Technology was an umbrella organization: as of 1986 it comprised 139 national scientific societies organized by discipline and 1.9 million individual members. It succeeded earlier scientific associations that had been founded in 1910-20. The China Association of Science and Technology served three major purposes. First, like professional associations in most countries, it brought individual scientists and administrators together with their professional peers from other work units at conferences, lectures, and joint projects, and it promoted communication across administrative boundaries. Second, the China Association of Science and Technology had a major role in the popularization of science and dissemination of scientific knowledge to the general public. This latter function was accomplished through the publication of popular-science journals and books aimed at an audience with a high-school education and through lecture series, refresher training for technicians and engineers, and consultation for farmers and rural and small-scale industries. Throughout the 1980s, the China Association of Science and Technology and its constituent associations served increasingly as consultants to government officials. Third, the China Association of Science and Technology played a major role in China's international scientific exchanges and hosted delegations of foreign scientists, sponsored international scientific conferences in China, participated in many joint research projects with foreign associations and scientific bodies, and represented China in many international science societies. International Ties Since emerging from the self-imposed isolation and self-reliance of the Cultural Revolution, China has expanded its international scientific exchanges to an unprecedented degree. The 1980s policy of opening up to the outside world, a basic element of Deng Xiaoping's prescription for modernization, was nowhere better exemplified than in science and technology policy (see China and the Four Modernizations, 1979-82, ch. 1). The goal was to help China's science and technology reach international standards as quickly as possible and to remedy the damage done by the Cultural Revolution. This was achieved by participating in international conferences, cooperating in projects with foreign scientists, and sending thousands of Chinese graduate students and senior researchers to foreign universities for training and joint research. Scientific cooperation has come to play a significant part in China's foreign relations and diplomatic repertoire. Visits of Chinese leaders to foreign countries are often marked by the signing of an agreement for scientific cooperation. In mid-1987 China had diplomatic relations with 133 countries and formal, government-to-government agreements on scientific cooperation with 54 of them (see An Overview of China's Foreign Relations, ch. 12). When diplomatic relations were established between China and the United States in January 1979, the Joint Commission in Scientific and Technological Cooperation was founded. Since then, the two governments have signed twenty-eight agreements on scientific and technical cooperation in fields ranging from earthquake prediction to industrial management. China has mutually beneficial scientific exchange programs with both technically advanced nations and those having only a minimal scientific capability. Although China tended to receive aid from more scientifically advanced nations and to render aid to the less developed, the equality implied in scientific exchange made it a useful diplomatic form. In 1987 China had scientific-exchange relations with 106 countries--usually in the form of agreements between the China Association of Science and Technology and a foreign equivalent. Incomplete statistics indicated that by 1986 Chinese scientists had completed over 500 joint projects with scientists in the United States and were working on 1,500 projects with counterparts in various West European countries, 300 with those in Eastern Europe, and at least 30 with Japanese researchers. In June 1986 the Chinese Academy of Sciences signed an agreement with the Soviet Academy of Sciences for scientific cooperation in unspecified fields. Many exchanges with the United States involved Chinese-American scientists and engineers, who collaborated with visiting Chinese researchers in the United States and visited China to lecture on their specialties and to advise scientific bodies. By 1986 the China Association of Science and Technology or its constituent associations were full members of 96 international scientific societies and committees, and over 300 Chinese scientists held office in international scientific bodies. China also was an active participant in United Nations scientific activities in the 1980s. Luoyang, Henan Province, is the site of the United Nations Educational, Scientific and Cultural Organization's International Silt Research and Training Center, which specializes in problems of river silts. Apart from the 35,000 students China sent abroad for training between 1979 and 1986, approximately 41,000 Chinese scientists took part in various international exchanges. Between 1980 and 1986, China hosted 155 international academic conferences, which were attended by 10,000 foreign scholars and 30,000 Chinese participants. China also has employed substantial numbers of foreign experts, often retired scientists or engineers, as short-term consultants. International exchanges represent one of the most successful aspects of the Chinese government's efforts to raise the level of science and demonstrate the strength of the centralized direction and funding possible under China's bureaucratic organization of science. The weaknesses of that mode of organization are evident in the less successful efforts to improve the internal functioning and productivity of the domestic science and technology establishment and have generated a major effort to reform that establishment. -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90071 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 73 DB Rec# - 666 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH9.03 Title :CHAPTER 9.03: THE REFORM PROGRAM Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : THE REFORM PROGRAM Shortcomings of the Science and Technology System From the perspective of China's leaders, the entire science and technology system of the late 1980s, with its 8 million personnel and 10,000 research institutes, represented an expensive, underutilized and not very productive capital investment. Dissatisfaction with the system had become pervasive by the early 1980s, and both scientists and political leaders agreed on the necessity for fundamental reform. The primary complaint of the leadership was that, despite thirty years of policy statements, central plans, and political campaigns directed at the attitudes of scientists and engineers, science still was not serving the needs of the economy. Reformist political leaders and senior scientists identified a number of organizational problems that were inherent in the system adopted from the Soviet Union and that had been compounded by Chinese work-unit and lifetime job assignment practices (see Differentiation; Common Patterns, ch. 3). In an October 1982 speech to the National Science Awards Conference, Premier Zhao Ziyang identified the following as primary problems: uneven development and lack of coordination among scientific fields; lack of communication between research and production units; duplication of research and facilities; rivalry among institutes, administrative bodies, and hierarchies; and maldistribution of personnel, with some units and fields overstaffed and others very short of skilled personnel. Zhao's speech drew upon and was followed by extensive discussions of management and organization by scientists and administrators. These discussions emphasized the prevalence of departmentalism, compartmentalism, and fragmentation of efforts. These problems, when combined with poor management, poorly educated managers, absence of incentives for good work or of penalties for poor performance, and absence of direct communication between research units and productive enterprises, resulted in the failure of the science and technology establishment to serve production and economic growth. In the 1980s research institutes, like all Chinese work units, responded to an economic system in which supplies were uncertain by attempting to be as self-sufficient as possible. Exchanges of information, services, or personnel across the very strictly defined administrative boundaries were difficult, resulting in failure to share expensive imported equipment and in widespread duplication of facilities. The absence of information on work being done in other research institutes, even in the same city, frequently led to duplication and repetition of research. Like all other workers in China, scientists were assigned to research institutes or universities by government labor bureaus. Such assignments frequently did not reflect specialized skills or training. Assignments were meant to be permanent, and it was very difficult for scientists or engineers to transfer to another work unit. In many cases, talents or specialized training were wasted. Institutes that may have had the funds to purchase advanced foreign equipment often had no way to hire a Chinese chemist or mathematician. Not only were China's scientists and engineers in short supply, many were underemployed or misemployed. The Program In March 1985, after extensive discussion, consultation, and experimentation, the party Central Committee called for sweeping reforms of science management. The reforms proposed in the "Decision on the Reform of the Science and Technology Management System" represented a major break with past practices, and they assumed corresponding reforms in the nation's industrial and economic systems. By changing the method of funding research institutes, encouraging the commercialization of technology and the development of a technology arket, and rewarding individual scientists, the reforms of the mid-1980s were meant to encourage the application of science to the needs of industry. It was envisaged that most research institutes would support themselves through consulting and contract work and would cooperate with factories through partnerships, mergers, joint ventures, or other appropriate and mutually agreeable means. The ultimate goal was to encourage exchange and cooperation and to break down the compartmentalization characterizing China's research and development structure. The principal means for accomplishing the reforms was changing the funding system to force research institutes to establish contact with productive enterprises and to do work directly supporting those enterprises. Direct allocation of funds to research institutes was to be phased out and replaced by a system under which institutes sold their services in the marketplace. The distinctions among institutes subordinate to the Chinese Academy of Sciences, the industrial ministries, provincial-level governments, colleges and universities, and even the NDSTIC were to be minimized, and all were to compete and collaborate in a single market-oriented system. Institutes doing basic research were to compete for grants from a National Natural Science Foundation (which was subsequently established). The reforms were not intended as a budget-cutting measure, and total state funding for science and technology was to be increased. A technology market and the commercialization of technology in the late 1980s were to be developed to encourage the transfer of technology and the transformation of research results into products and services. Direct centralized administration and supervision of research were to decline, and institutes were to be headed by younger, technically qualified directors, who were to be given broad powers to select their own research topics and to seek out partners for cooperation and consultation. Scientific personnel were to receive better pay and benefits, recognition of their achievements, and the right to do supplementary consulting work and to transfer to units where their talents could be better utilized. The Relation with Economic Reform Implementing the reforms of the science and technology system, however, presupposed reforms of the economic, industrial, and local administrative systems (see Reform of the Economic System, Beginning in 1979, ch. 5). In general, science and technology reforms represented the application to that sector of the principles underlying the sweeping reforms of the economy proposed in the October 1984 "Decision of the Central Committee of the Chinese Communist Party on Reform of the Economic Structure." Both reform "decisions" emphasized greater autonomy for institutions, a greater role for the market, more competition, and rewards for the successful introduction of improved products and processes. In every case, the goal was increased productivity and economic benefit. The central provisions of the 1980s reform related to funding, the technology market and cooperative ventures, and the rights and potential job mobility of individual researchers. The intent of the reformers was to change the basic conditions of the economic system, so that the self-interest that had pushed managers of factories and research institutes toward compartmentalization, duplication, and hoarding of resources would henceforth push them toward cooperation, division of labor, and orientation toward the needs of the market. Because these reforms represented a radical departure from the procedures developed since the 1950s, the leadership anticipated that their implementation would be slow, and it planned to phase them in over a number of years. Perhaps because of the centrality of funding to the whole reform scheme and because the administrative machinery for handling budgets was already in place, many concrete provisions for funding research were adopted following the March 1985 Central Committee decision. In February 1986 the State Council promulgated provisional regulations under which science and technology projects listed in the annual state economic plan were to be completed as contract research, in which there would be nationwide open bidding on the contracts. Banks were to monitor expenditures under the contract. Institutes conducting basic research were to have their regular operating expenses guaranteed by the state, but all other income would come from competitive research grants. The government was to continue to fund completely the institutes working in public health and medicine, family planning, environmental science, technical information, meteorology, and agriculture. In 1986 the newly established National Natural Science Foundation, explicitly modeled on the United States National Science Foundation, disbursed its first competitive awards, totaling -Y95 million (for value of the yuan---see Glossary), to 3,432 research projects selected from 12,000 applications. The amount of money awarded to individual projects was not large, but the precedent of competition, disregard of administrative boundaries, and expert appraisal of individual or small-group proposals was established and widely publicized. And, early in 1987, the NDSTIC announced that henceforth weapons procurement and military research and development would be managed through contracts and competitive bidding. Technology Markets and Joint Ventures Commercializing technology requires markets, and China in the late 1980s had to develop market institutions to handle patents, the sale of technology, and consulting contracts. This was a major endeavor and one that promised to take many years. Deciding how to set prices for technology and how to write and enforce contracts for technical consulting proved difficult, largely because of the complexity of technology markets. Further, China lacked the legal and commercial frameworks to support such markets. Nevertheless, institutes and factories participated in "technology fairs" and established contractual relations in great numbers, with the total technology trade volume in 1986 reaching an estimated -Y2.3 billion. Research institutes and universities formed companies to sell technical services and develop products. Even the formerly self-contained Chinese Academy of Sciences set up companies to export specialty magnets and to develop optical products. In the late 1980s, China's technology markets and efforts to commercialize scientific and technical knowledge were growing rapidly amid considerable confusion, ferment, and turmoil. Although progressing, the commercialization of technology was proving difficult to implement, and, perhaps for this reason, the State Council announced in February 1987 that most applied scientific research institutes were to be incorporated into large and medium-sized productive enterprises to coordinate research with the needs of production. The precise form the technology market would eventually take was not clear, but its development had wide support and was not likely to be halted or reversed. Personnel and Job Mobility From one perspective the most important element of China's science and technology system is its human capital--its trained scientists and engineers. By the 1980s it was widely recognized in the Chinese press that scientists, like all intellectuals, had been poorly treated, underpaid, and burdened with difficult living conditions that reduced their productivity. In many cases scientists' abilities were wasted because they were assigned to jobs outside their expertise or because their institute already had all the professionals in their field it needed and there was no way for them to change jobs (see Educational Investment, ch. 4). Many Chinese science policy writers were familiar with the conclusion of Western specialists that scientific progress and the effective application of science to practical problems are facilitated by personnel mobility. Accordingly, the March 1985 party Central Committee decision called for reform of the personnel system to promote a "rational flow" of scientific and technical personnel. Throughout the late 1980s, however, job mobility and attempts to place scientists where their talents could have the greatest effect were the aspect of reform in which least was achieved. Transfer of scientists from one unit to another remained a major step, and a relatively infrequent one. According to the State Science and Technology Commission, 2 percent of scientists and engineers changed work units in 1983, and only 4 percent in 1985. Personnel still required the permission of their work unit heads to transfer, and that permission often was withheld. Many directors of institutes were accused of having a "feudal mentality," that is, regarding personnel as part of their unit's property. The State Council reiterated in the mid-1980s that scientists and engineers had the right to do consulting work in their spare time. In practice, however, such spare-time consulting often created problems within the work unit as some institute directors attempted to confiscate payments for consulting or even to charge their personnel in the local courts with corruption and theft of state property. Although the press gave considerable publicity to scientists who had left the "iron rice bowl" of a Chinese Academy of Sciences institute to start their own business or to join a growing collective or rural factory, such resignations remained relatively rare. Possibly more common were practices whereby institutes detailed their personnel on temporary consulting contracts to productive enterprises. The difficulties in transferring scientific personnel even when the Central Committee and the State Council made it official policy demonstrated the significance of China's unique work-unit system of employment and economic organization and the obstacles it presented to reform. Allowing personnel to decide for themselves to move out of the work units to which the state and the party assigned them would be a major break with the practices that have become institutionalized in China since 1949. Some observers believe that because of its potential challenge to the authority of the party, which controls personnel matters in all work units, job mobility for scientists, even though it would promote scientific productivity and the growth of the economy, may be too extreme a reform to be feasible (see Differentiation, ch. 3). -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90072 . ARMY AREA HANDBOOK access is provided courtesy of UM-St. Louis Libraries Match 74 DB Rec# - 667 Dataset-ARMAN Source :U.S. DEPARTMENT OF THE ARMY Source key :AR Program :ARMY AREA HANDBOOKS Program key :AR ARMAN Update sched. :Occasionally ID number :AR ARMAN CHINACH9.04 Title :CHAPTER 9.04: TECHNOLOGY TRANSFER Data type :TEXT End year :1994 Date of record:04/19/1994 Keywords 3 : | China Text : TECHNOLOGY TRANSFER Policy In the late 1980s, China's goals of modernization and rapid economic growth depended on the large-scale introduction of foreign technology. The task was to import technology to renovate and upgrade several thousand factories, mines, and power stations whose levels of productivity and energy efficiency were far below prevailing international standards. Since 1980 Chinese policy statements have stressed the need to improve existing facilities, to import technology rather than finished goods, and to renovate factories through selective purchase of key technology rather than through purchase of whole plants. This was an unprecedented problem, since China's previous experience with technology transfer, both in the massive Soviet technical-aid program of the 1950s and in the more modest purchases of fertilizer and petrochemical plants in the 1960s and early 1970s, featured large projects that brought in complete plants. In the 1980s much of the technology to be imported was production or process technology, representing better ways of producing items China already manufactured, such as truck transmissions or telephone cables. Such technology was usually the proprietary knowledge of foreign corporations, and China demonstrated an unprecedented willingness to cooperate with such firms. With the explicit aim of promoting technology imports, China made great efforts to attract foreign businesses and foreign capital and permitted joint ventures and even foreign-owned subsidiaries to operate in China. China's economic planners gave priority in technology imports to electronics, telecommunications, electric-power generation and transmission, transportation equipment, and energy-saving devices. The degree of central control over technology imports fluctuated in the 1980s, reflecting changing foreign trade policies and foreign exchange balances, but the overall trend was toward devolution of decision making to those who use the technology or equipment. Bank loans and other means were made available to encourage end users to select appropriate technology. Modes of Transfer The transfer of proprietary technology from a foreign corporation is, among other things, a commercial transaction, and such transactions take many forms. Chinese authorities have selected joint-equity ventures as their preferred mode of technology transfer. In such ventures, both the foreign and the Chinese partner contribute capital, each provides what it has the advantage in (usually technology and access to world market for the foreign partner and labor and a factory for the Chinese partner), and management and profits are split. Many major foreign corporations with technology that China desires have been reluctant to risk their capital in such ventures. But enough have agreed to produce such items as jet airliners, computers, and machine tools that Chinese authorities can claim success for their policy. Linking Technology and Economics As they have accumulated experience in dealing with foreign corporations, Chinese economic administrators and enterprise managers have become better able to negotiate contracts that, while not full joint ventures, still permit the necessary training and consultation in the use of foreign technology. By the late l980s, the transfer of foreign technology had become a normal commercial transaction. To an increasing extent, policy and practices for technology transfer were becoming part of general economic and foreign trade policies. China faced problems in assimilating technology in the factories that imported it and in deciding which foreign technologies to import. It was becoming clear to Chinese planners and foreign suppliers of technology that these problems reflected overall deficiencies in technical and management skills and that they were general economic and management problems. The solution to these problems was increasingly seen by Chinese administrators as lying in reforms of the economy and industrial management. The effort to import and assimilate foreign technology thus served to help unify technology policy and economic policy and to overcome the problems of the separation of science, technology, and the economy, which China's leaders had been trying to solve since the early 1950s. * * * Because of the continuity of the issues affecting China's science and technology, many of the studies carried out in the early 1960s are still useful. Among these are Leo A. Orleans' Professional Manpower and Education in Communist China, Wu Yuan-li and Robert B. Sheeks' The Organization and Support of Scientific Research and Development in Mainland China, and Cheng Chu-yuan's Scientific and Engineering Manpower in Communist China, 1949-1963. Richard P. Suttmeier's 1974 Research and Revolution: Science Policy and Societal Change in China sets out most of the basic policy choices for science in China. Articles by Suttmeier and Denis Fred Simon cover most aspects of current science policy. Science in Contemporary China, edited by Orleans, assesses the state of science in China as of 1980. Rudi Volti's Technology, Politics, and Society in China and K.C. Yeh's Industrial Innovation in China with Special Reference to the Metallurgical Industry provide good overviews of China's science and technology system. Current news of policies and achievements in science and technology is available in such Chinese sources as Beijing Review, China Daily, and China Exchange News. Chinese reports and discussions of science and technology policy are translated and published in the Joint Publications Research Service's China Report: Science and Technology. (For further -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistic's Division's May 1994 NATIONAL TRADE DATA BANK (NDTB) CD-ROM, SuDoc C1.88:994/5/V.2 Processed 6/10/1994 by RCM (UM-St. Louis Libraries)/ AAH90073 .